While economic momentum has moved meaningfully lower, largely driven by weakness in China, the Canadian economy has surprised markets to the upside.
Equity markets maintained a generally positive tone over the quarter as ongoing concerns regarding global trade were offset by dovish monetary policies.
Bond markets posted strong returns in the second quarter of 2019 in response to evidence of weakness in the global economy and anticipation of central bank interest rate cuts.
As the global economic and inflation outlook continues to deteriorate, central banks will prepare financial markets for possible forthcoming interest rate cuts.
There has clearly been a ratcheting up of policy stimulus in this business cycle.
Longer term, quality companies with superior pricing power and competitive moats should hold up better in an environment where coordinated government and central bank policies leads to higher long-term inflation.