Eric Bushell, chief investment officer at Toronto-based Signature Global Asset Management, says he remains bullish on equities and less so on bonds. "Global economic growth is intact, the fundamentals of the equity market are still constructive and despite the fact that the bull market in equities is getting longer in the tooth, valuations are still within reason."
Since the beginning of this year, says Bushell, the financial markets have been adjusting to the new environment of rising interest rates and the widening of credit spreads in the bond market, as investors demand higher yields from corporate fixed-income securities versus those on government issues. "The result has been a lacklustre year-to-date performance in both the equity and the bond markets."
Bushell says he expects the new U.S. Federal Reserve chairman, Jerome Powell, will continue the strategy of raising the federal funds rates, but there is a caveat for the rest of the world. "Unlike his predecessor, Janet Yellen, Powell's emphasis is largely on fostering a strong U.S. economy, rather than assessing the implications of Fed action on the global economy."
