This article is intended for Institutional Investors (as defined in the Securities and Futures Act, Chapter 289 of Singapore) only and is not suitable or intended for persons who do not qualify as such. Summary A more challenging balance between growth and monetary policy – Our ‘fragile goldilocks’ base case assumes that central banks can offset the ongoing growth slowdown. In our view, that assumption is now more tenuous in Europe, but still holds in the US. Trade tensions and central bank policy resolve are key worries – Trade tensions continue to be the main source of a negative shock to growth and most major economies, including the US, are feeling it. Falling inflation expectations are testing policymakers’ resolve. Resilience and fiscal and monetary policy room in the US – The US has a better chance of remaining in ‘goldilocks’ mode than Europe for two key reasons. First, it has more room for monetary and fiscal policy easing. Second, it is generally more resilient to external shocks. Less room to manoeuvre in the eurozone – Investors are losing confidence in the fire-power of eurozone policymakers. So far, hints of fiscal stimulus have not been enough to reverse the sharp fall in core EMU bond yields.