Beyond the evident slowdown in the global economy in recent months, as a result of the resurgence of COVID-19, we believe this should be adequately offset by greater policy support, especially in China, which would shift from a tight monetary stance to a more accommodative one—either by easing monetary policy or through some form of more targeted fiscal stimulus—while the Federal Reserve will likely have to delay any announcement of a tapering of asset purchases until December, which remains our baseline scenario.

The recent debate has focused on possible policy adjustments by major central banks, particularly the Fed. In this regard, we believe that the pace of policy changes will be gradual enough not to derail the economic recovery or the market rally, while the differences between the more aggressive and more moderate central banks will create opportunities.

We expect major central banks to continue supporting growth and keep interest rates low for longer. This is positive for equity markets, particularly for cyclical and value sectors.

For more information, please see the attached report, “Market Outlook: September 2021.”