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Transcending The Peaks


The U.S. economy is well into its ninth year of expansion and this is the second longest expansion in the U.S. history. After a long period of economic growth and easy monetary conditions, the key question on all our minds is “Where do we go from here?”

Global growth has plateaued and is likely to slow down in 2019. That said, the typical late cycle pressures that precede a recession are not flashing red just yet, and hence, a recession this year is not our base case. Current economic conditions have provided a slight uplift in inflation and we view the tightening monetary policy as broadly appropriate. Rising interest rate represents a risk, but it should be manageable as long as the rate hike path remains gradual as it has been so far this cycle.

It is understandable that a bull run will eventually end and investors should be prepared when it happens. The maturing U.S. business cycle and heightened stresses in the financial markets make it increasingly prudent to focus on capital preservation in 2019. We continue to emphasise the importance of diversification and the role alternative investments could play in reducing overall portfolio volatility. We retain a preference for defensive positioning, especially when recent market moves reinforce our stance for building greater resilience into portfolios.

Click here to read our 2019 Investment Outlook and Strategy.

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