CIO Insights: A Critical Juncture, and Our Teams’ Outlook

2014 has not met Wall Street’s expectations regarding economic growth, interest rates, the U.S. dollar, U.S. Treasury bond prices, and corporate earnings.

Will this divergence from expectations continue? Here and in our other CIO Insights this quarter, our CIOs examine factors that fed into this critical juncture, shaping our investment teams’ outlooks and positioning for the coming months.

Read the full Q3 2014 CIO Insights introduction: A Critical Juncture After an Unsettled Start

Summary

  • Coming into 2014, consensus expectations included stronger global economic growth, higher interest rates, a stronger U.S. dollar, declining bond prices in the U.S. Treasury market, and improving corporate earnings.
  • Instead, we’ve seen the U.S. economy contract in the first quarter; U.S. Treasury yields and related interest rates mostly decline, mixed performance by the U.S. dollar; and lackluster first-quarter corporate earnings.
  • How transitory was the first-quarter weakness? Are we on the brink of stronger results, or a further extension of the mostly subdued/muted conditions we’ve experienced since 2011?
  • This critical juncture provides opportunities to flex our fundamentally based, active management approaches toward research and security selection to find and pursue opportunities and address challenges.

The opinions expressed are those of G. David MacEwen and Victor Zhang and are no guarantee of the future performance of any American Century Investments portfolio.

For educational use only. This information is not intended to serve as investment advice.