Q3 Investment Outlook: Remain Patient While Trade Talks Play Out

Here are key takeaways from our latest client-approved Investment Outlook report:

  • After a strong first half of the year, we don’t see a fundamental justification for markets to make a big move higher.
  • We expect U.S. economic growth to moderate. Other developed markets lag the U.S. but are stabilizing. Emerging markets (EM) benefit from the dovish Federal Reserve (Fed), but trade tensions and tepid developed market growth threaten the EM growth outlook.
  • Central banks remain accommodative and a Fed rate cut is on the table due to soft economic data and the impact of trade conflicts.
  • Don’t let noisy public posturing around trade conflicts drive your long-term decision-making. Be patient while quiet work on the details takes place outside the limelight.
  • Domestically focused companies in developed and emerging markets alike may be less exposed to the effects of a downturn in global trade.
  • Though the initial set of tariffs on Chinese goods had only modest impacts on consumers, we believe companies will pass along higher costs from future tariffs to their customers.
  • With the U.S. election season getting an early start, we expect continued volatility for communications services and health care companies as they take political hits from both sides of the aisle.
  • Our outlook for U.S. Treasuries is positive against a backdrop of rising trade tensions and slowing economic growth. We have reduced our allocation to spread sectors.
  • With yields sharply lower around the world, our Alternatives team is finding income opportunities in bank loans, asset-backed securities and collateralized loan obligations.

Read the full report

Important Notices and Disclosures

References to specific securities are for illustrative purposes only and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.

International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks.

Alternative mutual funds that hold a variety of non-traditional investments often employ more complex trading strategies than traditional mutual funds. Each of these different alternative asset classes and investment strategies have unique risks making them more suitable for investors with an above average tolerance for risk.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

As with all investments, there are risks of fluctuating prices, uncertainty of dividends, rates of return and yields. Current and future holdings are subject to market risk and will fluctuate in value.

Historically, small- and mid-cap stocks have been more volatile than the stocks of larger, more established companies.

Diversification does not assure a profit nor does it protect against loss of principal.

Generally, as interest rates rise, bond values will decline. The opposite is true when interest rates decline.

Past performance is no guarantee of future results. Mutual fund investing involves market risk. Investment return and fund share value will fluctuate. It is possible to lose money by investing in mutual funds.

The opinions expressed are those of the chief investment officers and are no guarantee of the future performance of any American Century Investments portfolio. Statements regarding specific holdings represent personal views and compensation has not been received in connection with such views.

This information is not intended to serve as investment advice. The information is not intended as a personalized recommendation or fiduciary advice and should not be relied upon for investment, accounting, legal or tax advice.

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