An unusual economic recovery for corporate bonds

Although we forecast that the global economy will grow this year at its fastest pace for almost half a century, we doubt “risky” corporate bonds will outperform “safe” government bonds by anything like as much as they have done since Q2 of last year.
Oliver Jones Senior Markets Economist
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Asset Allocation Update

Is US households’ cult of equity a bad omen for stocks?

The record allocation of US households (and non-profit organisations) to equites chimes with the broader evidence that the valuation of the US stock market is high by historical standards. With that in mind, while we are not forecasting a crash any time soon, we do anticipate that returns over the next decade will be substantially lower than they have been over the last one.

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Prospects for risky assets no longer seem as bright

We are still anticipating an extremely rapid recovery in the global economy over the rest of this year. But even so, it has become more difficult to make the case that returns from risky assets across the board will remain very strong, at least in the near term.

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Asset Allocation Update

Outlook for Treasuries still a threat to US equities

Today’s US Employment Report has failed to awaken the Treasury market from its slumber this quarter. We think, however, that long-dated yields will rise again in due course after their surge earlier in 2021.

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Asset Allocation Update

A few more thoughts on value vs growth

We still think that both the macroeconomic outlook and relative valuations point to the value factor outperforming the growth factor in the US stock market over the next couple of years.

4 June 2021

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Rising inflation and the risk to equities

Equity markets have taken signs that inflation is on the rise around the world in their stride recently, and we suspect that they will continue to do so for some time yet.

2 June 2021

Asset Allocation Update

Evaluating the inflation risk to US equities

According to BofA ML’s widely followed survey of global fund managers, inflation is now considered to be the greatest “tail risk” to markets, ahead even of the pandemic taking another turn for the worse and asset price bubbles. Are they right to be so concerned?

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