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Comfortable With the Uncomfortable

The “reflation trade” appears real, but risks are still elevated.

David R. Giroux, CIO for Equity and Multi-Asset; Justin Thomson, CIO, International Equities; Mark J. Vaselkiv, CIO of Fixed Income
T. Rowe Price,  December 2019

Key Insights

  • Although the 2020 outlook remains guarded, monetary accommodation by key central banks appears to have put the global economy on a reflationary course.
  • Low or negative yields pose duration risks for sovereign bonds. Potential opportunities can still be found in corporate bonds and other credit sectors.
  • We expect technology to continue to disrupt global sectors. For example, falling renewable energy costs have been turning many utilities into earnings growers.
  • Geopolitical events, including the U.S. presidential election, the trade war, Brexit, and Hong Kong unrest, could be triggers for market volatility in 2020

Heading into 2020, T. Rowe Price investment leaders believe global capital markets should be supported by continued economic growth and low but stable inflation rates. However, they also caution that a number of risks could trigger market volatility, including political uncertainties, slow earnings growth, and potential valuation excesses. 


T. Rowe Price

Founded in 1937 by Thomas Rowe Price, Jr., T. Rowe Price is an independent investment management firm solely focused on providing investment management and long-term results for our clients.