Markets 2019 – what lies ahead?

Markets 2019 – what lies ahead?

Forex 4 minutes to read
John J. Hardy

Global Head of Macro Strategy

Summary:  After a torrid year, capped by a treacherous finale, our Head of FX Strategy runs us through the hurdles and opportunities that await in 2019.


This is my last post for 2018 and I look forward to a 2019 that could prove one of the most interesting years in global markets since the global financial crisis as we look forward to having the following questions answered:

Are we headed into a global recession?

And just as importantly, what will the policy response look like the next time around? We suggest the next cycle of policy response will see central banks losing their independence as their reactions to the last crisis only dug a deeper hole and the answers to the world’s excess debt problems will have to be answer by government policy with central banks as auxiliaries to that policy.  

When will the US dollar turn weaker?

The tight Fed and the liquidity absorption one-two of Trump’s fiscal blitz from tax reform and the Fed’s QT have dried up offshore USD liquidity – the key drivers of the US dollar’s 2018 resurgence – will the USD only weaken again when the Fed is forced to not only stop tightening but to reverse course?

Can China deal with its need to deleverage while maintaining relative yuan stability?

Certainly, less risk now for the Chinese economy if China chooses the weaker yuan path, given the massive sell-off in crude oil.

EU politics – spinning apart or pulling together?

The EU political situation and increasingly the financial situation in EU banks is in a bad place as we head into a pivotal 2019 for the EU.  Possibly pivotal EU parliamentary elections are the first political litmus test in May. France and Italy’s budget situation will emerge again sooner or later next year and the EU political elite needs to wake up and get ahead of the curve by ending austerity and providing a roadmap towards greater mutualisation of debt, otherwise the countdown toward the next country to exit the EU – the euro currency area at least – begins.

Whither Brexit?

A second referendum appearing more likely and supposedly favouring a Remain vote – but wouldn’t a narrow overturn of the original Brexit referendum then trigger civil strife across the UK? At worst, even if we are heading toward a “no deal” Brexit, a significant delay is likely first and sterling looks too cheap even if more two-way volatility awaits early next year.

I will discuss the above questions and more in our quarterly outlook available around mid-month in January. Until then, a very happy New Year and please stay safe out there!

Quarterly Outlook

01 /

  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Capital Markets UK Ltd. (Saxo) and the Saxo Bank Group provides execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation. Access and use of this website is subject to: (i) the Terms of Use; (ii) the full Disclaimer; (iii) the Risk Warning; and (iv) any other notice or terms applying to Saxo’s news and research.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer for more details.

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992