Russell Investments Q3 Global Market Outlook

Russell Investments is the 3rd largest Investment Manager in the world with circa USD$430 billion under management.

Andrew Pease, is the Head of Global Investment Strategy at Russell Investments, and he shares his views on the outlook for Q3.

For those with more time and interest please click here to read the full report or watch the 6 minute video.

For those with less time and prefer a quick summary here are the key points we picked out from the report:

  • As of mid-June, vaccination rates are close to 50% in the United States and Europe, and over 60% in the United Kingdom. Japan is lagging, with just 15% of the population vaccinated, but should hit 50% by late August as the rollout accelerates. New, more contagious COVID-19 variants are spreading, but the good news is that the existing vaccines seem effective against these as well. This means the reopening should continue across the major developed economies through the second half of 2021. It also implies that the focus for markets has shifted to the strength of the growth rebound, the implications for inflation and the timing of central bank moves to taper asset purchases and eventually raise interest rates. 


  • Their view is that the inflation spike is mostly transitory from when the Consumer Price Index (CPI) fell during the initial lock down last year - and temporary supply bottlenecks. They expect it will take until the middle of 2022 for the U.S. economy to recover the lost output from the lock downs and longer in other economies. Broad-based inflation pressures are unlikely until then. It also means that market expectations for U.S. Federal Reserve (Fed) lift-off in 2022 are premature. They expect the Fed to commence tapering in 2022, with the second half of 2023 the likely timing for the first interest rate hike. There are two indicators they are watching to determine whether the inflation spike becomes an issue for the Fed, i.e., the Atlanta Fed Wage Tracker and the five year/five year break even inflation expectations data.


  • We are still in the early recovery stages of the cycle following the lock down induced recession. The reopening trade can be dated from 6th November 2020, when Pfizer announced the first successful COVID-19 vaccine. Since then, the best performing asset classes have been small cap and non-U.S. equities, global real estate investment trusts (REITS), commodities and the value factor.


  • Global equities remain expensive. Sentiment is close to overbought, but not near dangerous levels of euphoria. The strong cycle delivers a preference for equities over fixed interest for at least the next 12 months, despite expensive valuations.


Please contact us if you have any questions.

Kind regards,

The Coastline Private Wealth Team.

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