Global Asset Allocation: October Insights

Yoram Lustig , Head of Multi-Asset Solutions, EMEA


As of September 30, 2019

Easy Money, Again

The dovish shift of monetary policy this year has been dramatic as negative trade headwinds and geopolitical uncertainty are weighing on growth. So far, 21 central banks have moved into outright easing mode, which should help stabilize global growth and allay fears of an impending recession. However, monetary policy is at an unusual starting point. After a decade of unprecedented monetary stimulus around the world, rates are already at historically low levels and inflation remains stubbornly low, raising questions on its effectiveness. While policymakers continue to stress that they are ready to do more, policy has been restrained and largely reactive to date, allowing trade negotiations to drive the macro outlook.

Head Fake?

In late August and early September, equity markets experienced a sharp rotation out of momentum‑driven growth stocks into more cyclically oriented value names. This was a significant reversal in leadership, as cyclical companies had long been shunned by investors amid weak global growth while defensive growth stocks continued to lead. Bond markets similarly showed signs of inflection as interest rates bucked their downward trend, reversing a large part of August’s steep decline. Was this an unwind of extended growth equity valuations and overly bearish sentiment that sent rates to record lows? Or does the market truly believe that economic growth will pick up enough to sustain earnings and price momentum of cyclical sectors?


While sentiment within eurozone services has remained resilient, confidence within manufacturing dropped to its worst level in nearly seven years. The decline, largely driven by weakness in Germany (the region’s largest economy), has raised fears that Europe may be headed for a recession. Uncertainty surrounding Brexit, trade disputes, and issues in the auto industry have all weighed on growth within the region. Monetary policymakers have already stepped back in to support growth, and after years of austerity, an increasing number of countries are expected to provide fiscal stimulus. The question remains whether policymakers can deliver enough support to avert a third euro‑area recession in the past decade.

For a region-by-region overview, download the PDF.


This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources' accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.  

It is not intended for distribution to retail investors in any jurisdiction.