Bond yields slipped to very depressed levels once again marking that financial markets remain concerned about the state of the global economy. The question arises whether the worries of the fixed income universe is justified and what one should expect in terms of economic activity going forward. In the US, GDP growth is likely to slow throughout 2019, which – in our view – means normalisation from a previously overheated pace. As the Chinese structural growth story seems to be unhurt thus far, the current slowdown in China is of cyclical nature, which has been already addressed by the local authorities. In the rest of the EM space, apart from some idiosyncratic developments (such as Argentina, Turkey, etc.), most of the economies are likely to deliver good enough performances. We see the Eurozone, as one of the outliers, since economic activity in the Zone has been stuttering in 2H18, while monetary stimulus is being withdrawn and no meaningful fiscal support has been deployed – deepening the worries of an impending recession. Therefore, we are of the view that the probability of a global economic stagnation or recession is very low on the 12-18-month horizon.
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