Asset Allocation More thoughts on the effects of inflation on asset returns The muted reaction in the markets so far to today’s above-consensus surge in US inflation presumably reflects a view that it won’t have as much of a bearing on economic growth or monetary policy as... 13th July 2021 · 6 mins read
Asset Allocation Update What’s behind renewed US equity outperformance? It has become harder to make the case that the stock market in the US will fare worse than those in the rest of the developed world, now that the “rotation” trade has fizzled out. Nonetheless, we... 7th July 2021 · 4 mins read
Asset Allocation Update Would US equities beat Treasuries if inflation surged? The received wisdom is that inflation is worse for government bonds than for equities. Yet the S&P 500 has fared worse than 10-year Treasuries in a couple of periods of high inflation in the US since... 1st July 2021 · 3 mins read
Asset Allocation Update What might a fall in oil prices mean for rotation? While the drop back in oil prices which we forecast would probably mean an end to the recent outperformance of the energy sector, we doubt it would halt several other features of the rotation trade. 30th June 2021 · 3 mins read
Asset Allocation Update REITs, equities and the threat of higher inflation We doubt that US equity REITs would significantly outperform US equities in a period of higher inflation. 24th June 2021 · 3 mins read
Asset Allocation Update Pension portfolio rebalancing not key to low UST yields Although portfolio rebalancing by US pension funds may have played a role in depressing Treasury yields, it is likely to have been a small one in the grand scheme of things. After all, they own only a... 17th June 2021 · 3 mins read
Asset Allocation Update Treasury yields, inflation compensation & US equities The retreat in US Treasury yields over the past month or so seems at odds with the US economy’s fundamentals, and we doubt that it will be sustained. Our forecast that the 10-year yield will end 2021... 16th June 2021 · 4 mins read
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... 11th June 2021 · 2 mins read
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... 4th June 2021 · 3 mins read
Asset Allocation Update We expect a brighter future for Japan’s stock market Although Japan’s stock market has substantially underperformed its counterparts in the US, UK and euro-zone during the past few months, we don’t expect it to remain a laggard. 28th May 2021 · 3 mins read
Asset Allocation Update The next phase of the stock market rotation Although we think that the recent outperformance of the energy and materials sectors will soon come to an end, we still expect the financials sector to continue to fare better over the next few years... 24th May 2021 · 5 mins read
Asset Allocation Update We doubt the 10Y UST/Bund spread will keep shrinking Although the spread between 10-year sovereign bond yields in the US and Germany has narrowed so far during the second quarter of this year, we doubt this will continue for much longer. 19th May 2021 · 6 mins read
Asset Allocation Update Just how undervalued is the UK stock market? Although the valuation of the MSCI UK Index has become even more attractive compared to those of the MSCI USA Index and MSCI EMU Index since the outbreak of COVID-19, this is partly due to its sector... 14th May 2021 · 5 mins read
Asset Allocation Update Taking stock of risky asset valuations In this Update, we take a look at the valuations of a broad range of the “risky” assets that we cover on our Asset Allocation service. We think that six key points stand out. 14th May 2021 · 4 mins read
Commodities We think that commodities & US equities will diverge While commodities and US equities often move in the same direction, this is not always the case. We expect poor returns from commodities over the next few years, but reasonable returns from US... 29th April 2021 · 3 mins read
Asset Allocation Update Another look at the valuation of the US stock market Although the valuation of the US stock market is now approaching its peak during the dot com bubble, we doubt that it will reach such giddy heights. This reflects our forecast for a renewed rise in... 28th April 2021 · 6 mins read
