Economists define risk as something that can be priced but uncertainty as something that cannot. We find ourselves facing a year of uncertainty as the events of 2016 continue to reverberate. The economic implications of President Trump are top of the list, and there are also significant concerns about where the EU goes from here.
Oil, emerging-market (EM) growth, EM FX and inflation have turned, as suspected in our outlook 2016. On the back of that, bond yields have also likely bottomed out. However, while the direction has changed we still do not expect strong trends going forward. 2017 should see global growth only moderately picking up.
2017 promises to be another busy year for pensions in the UK, but with further collaborative and progressive industry efforts, there would appear to be some promising signs ahead.
We are confident that for the most part OPEC will initially implement the agreed production cuts. This would remove the oversupply from the market. Therefore, the price of Brent should remain above USD 50 per barrel in the first quarter. However, the higher oil price level will also result in a more rapid increase in US oil production.