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Our forecasts

All forecasts at a glance

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Editorial

Macro

Macro | Solid growth ahead

GDP growth in % (year-on-year)

  Region 2017F 2018F

United States

2.3

2.3

Eurozone

2.3

2.0

United Kingdom

1.5

1.3

Japan

1.5

1.5

China

6.7

6.5

World

3.7

3.8

Fiscal deficit (in % of GDP)

  Region 2017F 2018F

United States

3.5

3.5

Eurozone

1.4

1.3

United Kingdom

3.3

3.5

Japan

4.8

4.8

China

3.4

3.2

Consumer price inflation (in %)

  Region 2017F 2018F

United States1

1.5

1.8

Eurozone

1.5

1.4

United Kingdom

2.6

2.7

Japan

0.7

1.0

China

1.9

2.2

Current-account balance (in % of GDP)

  Region 2017F 2018F

United States

-2.6

-2.8

Eurozone

3.1

2.9

United Kingdom

-4.5

-3.5

Japan

3.5

3.5

China

1.8

1.8

Benchmark rates (in %)

  Region Current* Dec 2018F

United States

1.00-1.25

1.75-2.00

Eurozone

0.00

0.00

United Kingdom

0.50

0.75

Japan

0.00

0.00

China

4.35

4.35

Commodities (in U.S. dollars)

  Current* Dec 2018F

Crude oil (WTI)

57.4

55

Gold

1,275

1,230

Copper (LME)

6,762

6,600

* Source Bloomberg Finance L.P. as of 11/30/17
1 Core rate, personal consumption expenditure Dec/Dec in % (no average as for the other figures)
F refers to our forecast as of 11/16/17
WTI = West Texas Intermediate
LME = London Metal Exchange

The arrows signal whether we expect to see an upward trend , a sideways trend or a downward trend .

Equities

Equities | Well supported by earnings growth

  Current* Dec 2018F Total Return (expexted)1

Forecast

in %

Expected earnings growth

P/E impact

Dividend yield

United States (S&P 500)2

2,648

2,750

6.2

14%

-9%

2.3%

Europe (Stoxx Europe 600)

387

405

8.4

8%

-3%

3.7%

Eurozone (Euro Stoxx 50)

3,570

3,780

9.6

9%

-2%

3.7%

Germany (Dax)3

13,024

14,100

8.3

8%

-3%

3.1%

United Kingdom (FTSE 100)

7,327

7,400

5.3

5%

-4%

4.3%

Switzerland (Swiss Market Index)

9,319

9,450

4.7

13%

-10%

3.3%

Japan (MSCI Japan Index)

1,026

1,120

7.9

13%

-7%

2.4%

MSCI Emerging Markets Index (USD)

1,121

1,210

10.7

15%

-6%

2.8%

MSCI AC Asia ex Japan Index (USD)

696

760

11.8

16%

-5%

2.6%

MSCI EM Latin America Index (USD)

2,719

2,850

7.7

10%

-5%

2.9%

* Sources: Bloomberg Finance L.P., FactSet Research Systems Inc. as of 11/30/17
1 Expected total return includes interest, dividends and capital gains where applicable
2 Revised target as of 12/4/17
3 Total-return index (includes dividends)
F refers to our forecasts as of 11/16/17

Equity indices, exchange rates and alternative investments: The arrows signal whether we expect to see an upward trend , a sideways trend or a downward trend .
The arrows' colors illustrate the return opportunities for long-only investors.
positive return potential for long-only investors. limited return opportunity as well as downside risk. negative return potential for long-only investors.

Fixed Income

Fixed Income | Yields likely to rise only slowly

  Current* Dec 2018F

United States

U.S. Treasuries (10-year)

2.41%

2.60%

U.S. municipal bonds

92%

85%

U.S. investment-grade corporates

92 bp

80 bp

U.S. high-yield corporates

344 bp

350 bp

Securitized: mortgage-backed securities1

72 bp

100 bp

Europe

German Bunds (10-year)

0.37%

0.80%

UK Gilts (10-year)

1.33%

1.40%

Euro investment-grade corporates2

95 bp

75 bp

Euro high-yield corporates2

272 bp

260 bp

Securitized: covered bonds

46 bp

65 bp

Italy (10-year)2

138 bp

160 bp

Asia-Pacific

Japanese government bonds (10-year)

0.04%

0.10%

Asia credit

229 bp

210 bp

Global

Emerging-market sovereigns

288 bp

285 bp

Emerging-market credit

285 bp

270 bp

* Source: Bloomberg Finance L.P. as of 11/30/17
1 Current-coupon spread vs. 7-year U.S. Treasuries
2 Spread over German Bunds
F refers to our forecasts as of 11/16/17
bp = basis points

Fixed Income: For sovereign bonds, denotes rising yields, unchanged yields and falling yields. For corporates, securitized/specialties and emerging-market bonds, the arrows depict the option-adjusted spread over U.S. Treasuries. depicts a rising spread, a sideways trend and a falling spread.
The arrows' colors illustrate the return opportunities for long-only investors.
positive return potential for long-only investors. limited return opportunity as well as downside risk. negative return potential for long-only investors.

Currencies

  Current* Dec 2018F

EUR vs. USD

1.19

1.15

USD vs. JPY

112.5

115.0

EUR vs. GBP

0.880

0.885

GBP vs. USD

1.35

1.30

USD vs. CNY

6.61

6.80

* Source: Bloomberg Finance L.P. as of 11/30/17
F refers to our forecasts as of 11/16/17

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