Good News Regardless of the Headlines

Positive returns remained the theme for Q1. See what drove performance, recent adjustments to our asset mix strategy and thoughts on Q2 trends.

04.01.2017 - Scott Guitard, Vice President, Portfolio Manager

Good News Regardless of the Headlines

Despite the many concerning geopolitical headlines of Q1, global equity markets marched upwards, anticipating higher US economic growth driven by the Trump administration’s expansionary fiscal policy. Following their swift spike in the closing quarter of 2016, global bond yields took a step back in Q1, as investors reassessed inflation expectations. As geopolitical headlines dominate the news, we believe:

  • The US Federal Reserve (the Fed) will likely continue its tightening trend, raising rates a few more times this year. Long-term Canadian bond yields will face upward pressure due to the Fed’s actions, while the upside for Canadian short-term bond yields will be limited, as the Bank of Canada is likely to remain inactive.
  • There is upside for European equities in 2017 as the cyclical recovery continues. However, we remain wary of the elections underway in the region and the potential ripple effects (i.e., Brexit) of nationalist governments being elected in Germany, France or Italy.