Europe

Investors around Europe and North America are concerned that the stock market is increasingly overbought and vulnerable to exogenous risks. We agree and have good reasons to fear that festering geopolitical risks and the US election season will deal negative surprises.

In this Strategy Outlook we examine why, contrary to popular perception, the odds of a global recession over the next 12 months are rising not falling.

Does the recent surprise rate cut by the Swiss National Bank augur other dovish surprises among major central banks in Europe?

Despite a couple of rate cuts in H2 2024, borrowing costs will remain elevated in real terms amid lower inflation in the US and Europe. This and tightening fiscal policy will hinder domestic demand in advanced economies. Domestic demand in China and EM ex-China will remain very tepid, with risks skewed to the downside.

In this joint Foreign Exchange Strategy and Global Investment Strategy Special Report, we assess economic activity in Sweden, a highly cyclical and trade-oriented economy, and its implications for the global growth outlook.