Weak recovery likely to leave markets treading water

After a stellar 2019 for most risky assets, we think that they will generally make only small gains in 2020. Admittedly, our forecasts assume that the effects of the coronavirus outbreak on markets will eventually unwind, since we simply don’t know how it will evolve. But regardless of that, we think that the global recovery will be uneven and weaker than investors hope. With another big dovish surprise from central banks like the one that boosted valuations in 2019 also unlikely, we don’t expect equities to gain much. Finally, we think that bond yields will rise in the US and UK but edge down elsewhere, and that the US dollar will strengthen further.