Asset Allocation for July-August 2018

US trade protectionism is zooming fast and becoming the main threat to world economy. Despite potential risks ECB and Federal Reserve consider tightening monetary policy as actual macroeconomic figures remained strong.

ECB’s chief Mario Draghi announced willingness to cut inflows on European debt market and to reduce liquidity on securities market till the end of the year as he saw reaching Bank’s inflation and GDP targets. By-turn Jerome Powell, the new US FED chairman, keep current policy of hiking key rate every three months that has already drawn fire from Donald Trump. In tweet US President was outraged by excessive monetary tightening that could harm American business.

China, which has become the first one to face the American protectionism, is enforced to devaluate national currency and switch on printing of money purposely to support economy. Many experts believe that China economy will slow further to 6.0% annual growth in 2018.

Threat and challenges in world markets:

  • Trade war between US and China with EU
  • Monetary policy tightening by ECB
  • Monetary policy tightening by US FED
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