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China’s second quarter GDP growth slowed to 6.2% — its lowest level in the last few decades. Despite some positive signs on the retail front, it appears this deceleration will continue for the foreseeable future. The slowdown in the world’s second-largest economy is not unexpected, however, and will be met with stimulus given the increased stakes and risks associated with the ongoing trade battle between China and the U.S.
The likely result of the global growth slowdown and uncertainty is that central banks seem poised to reduce interest rates and increase stimulus. The last few weeks of July will be important to forecast financial assets for the remainder of the year. I anticipate risk assets to continue higher in this environment, as investors heed the phrase, “don’t fight the Fed,” and push equities to new record highs.
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