Although global growth declined in Q1, as anticipated in our Q1 2019 Outlook, risk assets continued their December 2018 romp as a result of an apparent de-escalation of U.S.-Sino trade tensions and a decidedly dovish pivot by G10 Central banks (See Table One). Some US indices recorded the biggest quarterly gains since the global financial crisis, while others approached record highs. Emerging markets pulled even with developed markets; but most of the former’s return was driven by a powerful relief rally in Chinese equities, sparked by the late 2018 suspension of escalating tariffs on Chinese imports. Indeed EM ex China underperformed developed markets by 3.5% on a U.S. dollar basis and 4.25% on a local currency basis.

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