We do not expect the recent respite for risky assets to last. The outlook for the advanced economies is bleak and the growth rate of corporate earnings is set to slow. Investors’ enthusiasm for risk is also likely to be tempered soon by fresh concerns about the future of the euro-zone. We think policymakers’ latest plan to tackle the debt crisis is too little, too late and that an eventual break-up of EMU remains on the cards. The euro is therefore likely to come under renewed pressure. Favourable valuations should cushion any downside for developed market equities, but the prices of industrial commodities are likely to fall further. By contrast, we expect perceived safe havens to prosper. We think the 10-year Treasury yield is headed for 1.5% and gold for $2,500/oz.