Wealth and Investment Management Title Slide JUN 8 – 10, Global Market Outlook

Wealth and Investment Management Markets and the Global Economy Barclays Research, Economics and Strategy June 2015 Henk Potts

Performance of our asset classes 3 Source: FactSet, Datastream, Barclays; graph based on asset class indices as published in Compass February 2013.

US forecasts in a nutshell 4 % y-o-y except where stated E2015F2016F GDP CPI Official interest rate (%) NA Future forecasts are not a reliable indicator of future performance

US Interest rates have been close to zero since Dec Data source: Datastream, Barclays

The slow normalisation of US policy will start in Sept Data source: Datastream, Barclays

Source: Bloomberg, Datastream, Barclays More than 200k new jobs each monthThe unemployment rate has steadily declined US labour market has rapidly recovered 7

Source: Datastream, Bloomberg, Barclays And debt affordability remains high Strong equity performance is driving higher net worthConsumer confidence Consumer confidence near multi-year highs 8

US Housing Market recovery has cooled 9 Source: Datastream, Barclays

The US Deficit is decreasing rapidly 10 Data source: Datastream, Barclays

Restructuring Europe is slow, but markets remain calm 11 Data source: Datastream, Barclays

The European Crisis isn't over….still plenty of risk in Data source: Eurostat, Datastream, Barclays

Greek government debt 13 Source: Datastream, Barclays

Inflation in the Euro area turned negative in Dec 14 Data source: Datastream, Barclays

The ECB’s QE program dwarfs the programs of all other central banks 15 Source: Gavekal, Barclays

Euro-area forecasts in a nutshell 16 % y-o-y except where stated E2015F2016F GDP CPI Official interest rate (%) NA Future forecasts are not a reliable indicator of future performance

UK forecasts in a nutshell 17 % y-o-y except where stated E2015F2016F GDP CPI Official interest rate (%)0.5 NA Future forecasts are not a reliable indicator of future performance

Implied interest rate United Kingdom 18 Data source: Datastream, Barclays

Japan - Real GDP and Inflation 19 Data source: Datastream, Barclays

Chinese GDP growth has slowed, but remains at a respectable level 20 Source: Datastream, Barclays

GDP growth in India 21 Source: Oxford Economics, Datastream, Barclays

Long term asset class performance 22 Data source: Barclays Equity Gilt Study

US Equities - S&P Data source: Datastream, Barclays

Expected earnings growth 24 Data source: IBES, Datastream, Barclays

S&P 500 Trailing Price/Earnings Ratio with Historical Median 25 Data source: Datastream, Barclays

S&P 500 and Eurofirst Data source: Datastream, Barclays

Equity performance 2015 year-to-date by region 27 Source: FactSet, Barclays

S&P 500 and Euro STOXX - Forward Price/Earnings ratio 28 Source: Datastream, Barclays

S&P 500 and Euro STOXX - Trailing Dividend Yield 29 Source: Datastream, Bloomberg, Barclays

Selected equity markets Source: Datastream, Barclays Developed Markets Equities have outperformed Emerging Markets Equities in the years after the financial crisis 30  US Large and SMID cap companies have had the highest returns since end of 2012

Forward PE - Developed and Emerging Markets 31 Data source: MSCI, Barclays

Government bond yields: selected markets 32 Data source: FactSet, Barclays

Bond represented by respective Barclays indices. Source: FactSet, Barclays High Yield nominal yieldsInvestment Grade Bonds nominal yield Investment Grade and High Yield Bond yields 33  Investment grade credit is still expensive and vulnerable to rising issuance: we are tactically underweight  Expensive, but less interest rate risk. The majority of the recent changes in spreads has been driven by moves within the energy space. We remain tactically underweight

Oil price - Brent Crude Oil 34 Source: Datastream, Barclays

Commodity prices 35 Data source: Datastream, Barclays

Gold has slumped 36 Source: Datastream, Barclays Past performance is not a guide to future performance

Divergence in growth rate and policy suggests the dollar will continue to strengthen 37 Data source: Datastream, Barclays

FX Forecasts 38 Latest forecasts dated 21 st May These forecasts represent our current views of the FX rates shown. These views may change in the future and may not accurately reflect actual future FX rate movements. All data as cob 1 st June 2015 unless stated otherwise.

Selected US equity performance statistics since Source: Barclays Equity Gilt Study 2015, Barclays; All investments can fall in value. You may lose capital. Please note that past performance is not a guide to future performance. Number of consecutive years Outperform cash Underperform cash Total number of years Probability of equity outperformance 75%78%73%79%85%100% Outperform bonds Underperform bonds Total number of years Probability of equity outperformance 69%67%66%69%79%92%

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