Capital Market Outlook
July 6, 2020
IN THIS ISSUE
- Macro Strategy — Market Rewarding Reflation Beneficiaries — The aggressive monetary and fiscal response to the shutdown-induced recession has aligned the Federal Reserve's short-term need to support the economy throughout the pandemic with its long-term mandate to anchor inflation expectations around the 2% target.
- Global Market View — The Growing Market for Hydrogen Fuel Cells — As economies around the world reopen, global growth resumes and greenhouse gas emissions recover, we expect electricity generated from hydrogen fuel cells to remain a fast-growing segment of the alternative energy mix.
- Thought of the Week — TIPS Likely To Continue To Outperform Conventional Treasuries — We believe that a continued increase in inflation breakeven rates and Treasury Inflation-Protected Securities (TIPS) outperformance is likely over the next year if our positive economic outlook proves correct.
Important Disclosures
All data, projections and opinions are as of the date of this report and subject to change.
This material was prepared by the Chief Investment Office (CIO) and is not a publication of BofA Global Research. The views expressed are those of the CIO only and are subject to change. This information should not be construed as investment advice. It is presented for information purposes only and is not intended to be either a specific offer by any Merrill or Bank of America entity to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.
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Investments have varying degrees of risk. Some of the risks involved with equity securities include the possibility that the value of the stocks may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the U.S. or abroad. Bonds are subject to interest rate, inflation and credit risks. Treasury bills are less volatile than longer-term fixed income securities and are guaranteed as to timely payment of principal and interest by the U.S. government. Investments in foreign securities (including ADRs) involve special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are magnified for investments made in emerging markets. Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration.