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In their Q2 2020 market outlooks, PGIM’s asset managers detail their expectations for an unprecedented recession.

April 29, 2020

The precipitous and devastating impact of the COVID-19 pandemic has left no doubt that global economies have entered an unprecedented recession. Investors are now left to ponder what’s next and to contemplate how deep the contraction might be, and how quickly markets can recover.


QMA’s Global Multi-Asset Solutions team believes that a global recession is unavoidable:

“The big question now is whether it will be a sharp, but short, recession lasting two or three quarters or a more long-lasting economic downturn. The response from global policy makers will also play a critical role in determining whether collateral damage can be minimized. The pandemic itself will worsen before it gets better, and no one can say with certainty when the crisis will abate. For now, QMA remains cautious with portfolio positioning across all risky assets and will continue to closely monitor for downside risk and signs of economic contagion that could push us toward a more adverse economic scenario.”


At this point, Jennison Associates believes we are just too early in the crisis to make precise estimates of companies’ earnings through the rest of 2020:

“This level of uncertainty is historic as is the extreme market volatility that comes with it. While Jennison Associates has expectations for a global slowdown of historic proportions, we’ve been through disruptions and periods of great uncertainty before, and we are confident that once conditions stabilize and economic activity revives, the companies that entered this crisis with the strongest competitive positions will emerge best positioned to thrive in a post COVID-19 world.”


According to PGIM Fixed Income, the crisis may become a seminal point for global interest rates and credit spreads:

“After falling for years, U.S. rates have entered the low realm of their developed market counterparts and may be poised to drift only slightly higher going forward.  However, credit spreads across securitized credit, investment grade, high yield, and emerging markets offer historically compelling value, and active management will be more critical than ever in both generating alpha and avoiding losses.”


PGIM Real Estate says that we are currently in the initial phase associated with any major real estate market disruption – illiquidity:

“During this phase, a lack of liquidity caused by increasing fear grinds capital markets to a halt. Limited transactions result in sidelined investors waiting for price discovery. Buyers and sellers are less likely to transact, and real estate lenders – both bank and non-bank – are equally hindered by the lack of market transparency. However, longer term, when price discovery returns, lenders with healthy balance sheets will resume lending, which in turn should support real estate price recovery.”

In the U.S., they believe the sectors likely to be impacted most-to-least are: hotels and hospitality, discretionary retail, offices, industrial, discretionary housing, necessity retail, storage and necessity housing. Their outlook also details implications for Europe and Asia Pacific.


For the full Q2 market outlooks, webinars and summaries, visit PGIM’s market outlooks page.


For the latest commentary on market events related to COVID-19, visit Markets in Turmoil: The Coronavirus Crisis.

Media Contact(s)

For PGIM Fixed Income
Lizzie Lowe

Sheila Kulik

For PGIM Real Estate
Caroline Bligh

For Jennison Associates
Julia O’Brien