We think that the best days are over for assets in the US, in both absolute and relative terms. For example, we expect bond yields to rise further there than in other developed economies over the next year or so, given the prospects for monetary policy. Meanwhile, we suspect that equities in the US will struggle to make headway, even as the economy performs fairly well. This is because we envisage a squeeze on profit margins as labour costs rise and the dollar rebounds. In our opinion, equities in other developed economies will fare better, aided by weaker currencies. Finally, we also anticipate that EM equities will outperform US equities over our forecast period.
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