In focus

Global Market Perspective Q2 2021: economic and asset allocation views

Investors welcomed 2021 with a more positive outlook on the world economy.

The roll-out of the Covid-19 vaccine and substantial policy support continued to aid the rally in risk assets. Commodities shone brightly, lifted by hopes of a return to economic normality. Meanwhile, the more cyclical and value-orientated stock markets of Europe and Japan outperformed.

Equity returns in emerging markets were more modest, given the stronger US dollar on the back of significant US fiscal stimulus. This also helped drive government bond yields higher, which led to a sell-off in developed sovereign and US credit bonds.

We have continued to upgrade our global growth forecasts, with the main increase seen in 2022 as the world returns more fully to normality.

For 2021, our global growth outlook is little changed as upgrades are overshadowed by a significant cut to our eurozone forecast. Against this backdrop, the increase to our inflation forecast this year is largely driven by higher commodity prices.

The impact is expected to be temporary, which allows central banks to keep monetary policy loose.

In terms of the greatest risk to our central macroeconomic view, this would be a ‘Sharp global recovery’. This scenario is based on a faster and wider vaccine delivery, less economic scarring and greater fiscal impact than in the baseline.

From an asset allocation perspective, we are still overweight in our allocation to commodities, which offers some protection from cost-driven inflation.

We remain positive on equities, but negative on government bonds and high yield credit. We recognise that equity valuations are no longer as compelling with the rise in bond yields. But higher bond yields have been a response to stronger growth, which is a more supportive backdrop for stocks. Moreover, we have a preference to the areas of the market that are less duration sensitive such as Japan and value sectors.

The full Global Market Perspective is available below as a PDF.

Read the full report

Global Market Perspective - Q2 2021 16 pages | 4,997 kb



The views and opinions contained herein are those of the Authors, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds.


This document is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.


Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested.


Schroders has expressed its own views in this document and these may change (to be used if the 1st statement above is not being used).


Schroders will be a data controller in respect of your personal data. For information on how Schroders might process your personal data, please view our Privacy Policy available at or on request should you not have access to this webpage.


Issued by Schroder Investment Management (Europe) S.A., 5, rue Höhenhof, L-1736 Senningerberg, Luxembourg. Registered No. B 37.799. For your security, communications may be taped or monitored


The forecasts stated in the document are the result of statistical modelling, based on a number of assumptions. Forecasts are subject to a high level of uncertainty regarding future economic and market factors that may affect actual future performance. The forecasts are provided to you for information purposes as at today’s date. Our assumptions may change materially with changes in underlying assumptions that may occur, among other things, as economic and market conditions change. We assume no obligation to provide you with updates or changes to this data as assumptions, economic and market conditions, models or other matters change.