In this latest Market Perspectives issue, we highlight the Vanguard house view on a number of current macroeconomic and market topics including monetary policy, economic growth, currencies, trade, asset returns and more.
Key highlights for this month
- Economic growth may slow later in the year, with the progression of Covid-19 and the prospects for a vaccine remaining the key drivers of economic activity globally.
- We continue to expect a 2020 U.S. economic contraction in a range of –7% to –9%
- Vanguard continues to foresee full-year growth for China in a 1% to 3% range
- Inflation could trend gradually higher but remain below the Fed’s 2% target range
- Vanguard expects a drop in the unemployment rate by year’s end to a range of 8% to 10%
Asset class return outlooks
Our ten-year, annualized, nominal return projections, as of June 30, 2020, are shown below. Please note that the figures are based on a 1.0 point range around the rounded 50th percentile of the distribution of return outcomes for equities and a 0.5-point range around the rounded 50th percentile for fixed income.
These probabilistic return assumptions depend on current market conditions and, as such, may change over time.
IMPORTANT: The projections or other information generated by the Vanguard Capital Markets Model® regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.
Distribution of return outcomes from the VCMM are derived from 10,000 simulations for each modeled asset class. Simulations are as of June 30, 2020. Results from the model may vary with each use and over time. For more information, see page 4.
Source: Vanguard Investment Strategy Group.
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Originally Posted on September 7, 2020 – Market Perspectives: September 2020
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