2020 Schwab Market Outlook—What's tipping the scale?


Schwab experts share their perspectives on the markets and investment environment.

Key Points

  • The U.S. economy likely will remain split in early 2020, with manufacturing and business investment still struggling amid trade uncertainty, but services activity and consumer spending healthy.

  • A resolution of the U.S.-China trade war could reverse business uncertainty and unleash investment. However, a global recession could occur if the manufacturing slowdown spreads to jobs and consumers.

  • Ten-year Treasury bond yields should move higher in 2020 as recession fears ease. Barring a setback on trade, yields could move back up to the 2.25% to 2.5% area. 

Trade wars and a global manufacturing decline weighed on stock markets in 2019, although central bank rate cuts and resilient consumers provided a positive counterbalance. The question heading into 2020 is: What may tip the scale? Will ongoing trade uncertainty and weakened manufacturing hurt job growth, finally dragging down the services and consumer side of the economy? Or will interest rate cuts and a resolution of the trade war spark a fresh round of global economic growth?

Each section in this 2020 Schwab Market Outlook—U.S. Stocks & Economy, Global Stocks & Economy and Fixed Income—will discuss ways to prepare for potentially changing conditions. Having a financial plan and an appropriately diversified portfolio are two key first steps for weathering any market environment. Note that this is just a one-year outlook, and investors should keep their investing time horizon in mind before reacting to any forecasts.

To learn more about Schwab's expectations for the coming year, explore the full 2020 Schwab Market Outlook.

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