The Charles Schwab Corporation (NYSE: SCHW), one of the leading brokerage firms in the U.S., has released its market outlook report for 2020.
Included are analyses and projections regarding U.S. and global stocks and economy, as well as the role of fixed income investments, particularly bonds. A common thread acknowledges the potential for a recession as well as the impact of the U.S.-China trade war on the market.
With most families that average global wealth of over $1 billion having reported that they anticipate a 2020 recession, and adjusting their portfolios accordingly, the stakes are high in the months ahead, and the interrelationship between trade with China and a recession seems clear in light of recent analysis.
The U.S.-China trade war has been a key influence in the arena of U.S. and international markets since tariffs began in 2018, not only impacting business deals and economical outlook for the U.S. but also contributing to a weaker Chinese economy. And while not relevant to the trade war by itself, earlier this year the Federal Reserve did indicate a 31.5% probability for an upcoming recession, higher than even indicated in 2007. When it comes to a potential recession, according to Schwab, "an end to the U.S.-China trade war would help, potentially reversing business uncertainty and unleashing investment."
Some tension has been appearing to dissipate so far amid the U.S.-China "Phase One" trade deal, which may play a role ahead in fixed income investments for one, according to Schwab. "Ten-year Treasury bond yields should move higher in 2020 as recession fears ease ... Barring a setback on trade, 10-year Treasury yields could move back up to the 2.25% to 2.5% area, while the chances of a drop back below the 2019 low of 1.52% are diminishing as global recession fears abate."
Schwab, which releases market outlooks every year, currently holds around $3.9 trillion in assets, and that amount is set to increase to over $5 trillion once Schwab's acquisition of TD Ameritrade Holding Corporation (NASDAQ: AMTD) closes.