It's a busy time in global markets. We are only a few business days away from the US presidential election. It is also the busiest earnings week of the third quarter, with many tech heavyweights reporting. And here in Canada, market watchers are eagerly anticipating new GDP data. There's lots to unpack in the markets right now, and back on the show to help us break it all down is Fidelity's Director of Global Macro Jurrien Timmer. Jurrien addresses the prospect of a low-return environment ahead, as some market analysts predict a "lost decade" with moderate gains for both stocks and bonds. He notes that historically, markets oscillate between periods of high and low returns, and with current high valuations, mean reversion may naturally drive returns lower. Jurrien and host Pamela Ritchie discuss the role of liquidity, noting that technical factors like the reverse repo program have buffered the effects of the Fed's tightening. Jurrien expects these buffers to diminish in 2025, potentially spurring a liquidity wave that could boost equities without triggering a recession, though it may slightly elevate inflation. He highlights a balanced labor market, which reduces inflationary pressures, and believes supply disruptions like port strikes will have minimal impact. He also looks ahead to 2025, where he foresees both equity growth and rising yields, which could create occasional market volatility. 

 

Recorded on October 28th, 2024.