Filtered by Subscriptions: Asset Allocation Use setting Asset Allocation
It may seem surprising that the MSCI USA Index has broadly kept up with the MSCI Europe Index in common-currency terms since 8 th June, given the simultaneous surge in cases of COVID-19 in the US while the virus has remained under much greater control on …
20th July 2020
The recent underperformance of US equity REITs compared with ordinary US equities seems to reflect concerns that the coronavirus could change behaviour in a way that hits the demand for many types of commercial property hard. We think that most of this …
16th July 2020
We continue to expect the 10-year conventional Treasury yield to remain firmly anchored, even as the S&P 500 rises further. This would be a marked contrast to the increase in the yield towards the end of the Global Financial Crisis (GFC), which gathered …
9th July 2020
We suspect that the real yields of US Treasury Inflation Protected Securities (TIPS) will fall a bit further, fuelling renewed gains in risky assets and underpinning gold despite a reduction in safe-haven demand. To re-cap, the real yields of TIPS have …
24th June 2020
The sizes and sources of second waves of COVID-19 are likely to be key factors in determining how much ground, if any, equities cede to government bonds in coming months. While our forecasts allow for new small, localised outbreaks in advanced economies, …
17th June 2020
If we are right that the world faces a period of low inflation over the next few years investors are unlikely to begin anticipating tighter monetary policy and so undermine the returns from government bonds. We think it is much more likely that returns …
5th June 2020
We anticipate that financial repression will bear down on the renewed low level of volatility of Treasuries, while facilitating a further decline in the level of volatility of US equities . Against this backdrop, we project that the returns from the …
29th May 2020
Although US equities still have a lot of lost ground to make up on long-dated Treasuries since the outbreak of coronavirus, we think that they will do so over time as the Fed engages in renewed financial repression. The underperformance of US equities …
22nd May 2020
The recent performance of different “factors” in the US stock market may seem surprising during the outbreak of coronavirus, given the adverse implications for the economy of the measures taken to control its spread. Like several other ongoing …
12th May 2020
We expect the returns from EM sovereign dollar bonds to be quite strong over the next few years, as the global economy gradually recovers. With some notable exceptions, we think that the dollar bonds of those countries and EM regions which have suffered …
5th May 2020
We suspect that the recent underperformance of MSCI’s UK Index relative to its USA Index will peter out when the world starts to get back to normal after coronavirus. The MSCI World Index includes mid- and large-cap equities in 23 developed countries, …
27th April 2020
While gold has rallied over the past month, we don’t think that it will continue to outperform most other asset classes in the way that it did in the aftermath of the Global Financial Crisis (GFC). On the contrary, we think that the GSCI Precious Metals, …
22nd April 2020
The S&P 500’s outperformance of many benchmark indices outside the US since the outbreak of coronavirus may not be surprising, given that it was also a salient feature of much of the previous decade. While we wouldn’t be surprised if the outperformance …
17th April 2020
Although energy commodities have substantially underperformed global equities in recent months, we think that the returns from both will be broadly similar over the remainder of 2020 if, as we expect, risky assets in general recover. While risky assets …
8th April 2020
Although real estate investment trusts (REITs) were clobbered during the recent market turmoil, their performance over short periods is often comparable to that of equites, which were also hammered. With this in mind, we expect REITs to stage a sustained …
Given how far they have fallen, we think EM equities in Latin America and EMEA will outperform their Asian peers once the coronavirus comes under control, even if the economic fallout in the former two regions is more severe. This would be similar to what …
1st April 2020
The surprising weakness of Treasuries alongside the collapse in US equity prices recently seems to have been driven by fire selling, not worries about inflation or debt. However, even if further falls in the stock market mean there are more forced sales, …
20th March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
Although Japan’s stock market has persistently underperformed its US counterpart since the financial crisis, there are several reasons why it may not continue to lag during the rest of this year and beyond. Chart 1 shows the cumulative returns in US …
13th February 2020
We think that the returns from US corporate bonds and equities will be nowhere near as good in 2020 as they were in 2019, given the outlook for Treasury yields, credit spreads, and corporate earnings. US investment-grade corporate bonds put in their …
3rd February 2020
We don’t expect the recent marked outperformance of US mega-cap equities to continue during the rest of this year and suspect that it will unwind if a Democrat wins the race to the White House. The phenomenal showing by US mega-cap equities can be seen in …
23rd January 2020
We expect the S&P 500 to outperform Treasuries by much less in 2020 than in 2019, as government bond yields edge up, the equity risk premium stops tumbling, and corporate earnings continue to disappoint. While US large-cap equities and government bonds …
13th January 2020
Our baseline assumption is that the returns in common currency from mid- and large-cap equities will be similar in the euro-zone and the US in 2020, after a decade in which those in the US have outperformed substantially. The elections there next year, …
4th December 2019
One reason to think that the relentless outperformance of the US stock market since the Global Financial Crisis (GFC) will not continue for another decade is its valuation, which has become comparatively stretched over the past year . Admittedly, …
15th November 2019
One reason to think that US equities will outperform US corporate bonds over the next couple of years is a larger-than-average wedge between their valuations. Comparing the valuations of US equities and US corporate bonds is not straightforward. One …
5th November 2019
We don’t think that asset valuations in general have risen to unsustainably-high levels, even though many are now far above their long-run averages. So we see no need for major corrections in asset prices. It is often argued that an asset’s equilibrium …
28th October 2019
We think that local-currency and USD-hedged returns from developed market government bonds will generally be poor through the end of 2020, but that USD- unhedged returns will be positive next year. Our detailed views of monetary policy can be found in our …
15th October 2019
Although US equity REITs still have comparatively high yields and low valuations, as well as solid fundamentals, we think that their outperformance of US equities will end given the outlook for Treasuries. 2019 has been a bonanza year so far for equity …
9th October 2019
Although we forecast a correction in the US stock market later this year, we think it will outperform Treasuries by a large margin in 2020-21. This view rests on an assumption that inflation will remain quite low, but positive. Other inflation outcomes …
30th September 2019
We think that this year’s joint surge in the prices of US equities and government bonds is on its last legs, given the outlook for monetary policy and corporate earnings. Share prices get a boost when there is a reduction in the rate at which investors …
23rd September 2019