Broad-based growth continues to be strong but has stopped accelerating. Volatility is likely to continue and may be exacerbated by geopolitical events.
We are not expecting a sharp increase in inflation, but a U.S.-led upward drift in 2018 should result in modestly higher rates, mainly in the shorter maturities. This will act as a headwind to fixed income returns.
The first quarter showed an increasing tendency for individual stock movement with some notable large, technology-related, high-momentum names among the biggest movers.
Global earnings are exceeding expectations so far this year, which is lowering the price-to-earnings multiple. We see this as a positive and healthy development for the medium-term outlook.
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