Asset Allocation Update Assessing the implications of rising Treasury yields Our current views of many assets and the US dollar are influenced by our forecast that the yields of conventional Treasuries will remain firmly anchored, even as expected inflation increases. We are... 7th October 2020 · 3 mins read
Asset Allocation Update Equities, commodities, and the risk of higher inflation The fallout from COVID-19 will probably keep inflation subdued in the near term. But there is a risk of significantly higher inflation further ahead if earlier policy stimulus starts to push prices up... 28th September 2020 · 3 mins read
Asset Allocation Update Assessing the risks posed by the Fed’s largesse We are not convinced the Fed is sowing the seeds of the next crisis by pursuing very easy monetary policy, even if this contributes to higher asset prices. Instead, history suggests the main factors... 24th September 2020 · 4 mins read
Asset Allocation Update Real yields and the $ unlikely to be the 1980s redux Although we think a further shift in real yields in the US vis-à-vis other major economies will keep the dollar under pressure, we expect the overall move to be far smaller than those of the 1980s... 4th September 2020 · 4 mins read
Asset Allocation Update Short-term gain but long-term pain for energy stocks? We suspect that some of the recent underperformance of energy stocks will unwind over the next few years if, as we forecast, the prices of energy commodities grind higher. Nevertheless, we think that... 1st September 2020 · 4 mins read
Asset Allocation Update Sector performance in the next phase of coronavirus We expect some sectors of the stock market that have underperformed in coronavirus to make up ground on those that have outperformed, assuming the virus is brought under control. A notable exception... 26th August 2020 · 4 mins read
Asset Allocation Update Stocks likely to beat bonds regardless of election result Political uncertainty often seems to have weighed on the performance of US equities, both in absolute terms and relative to Treasuries, before a presidential election. But another lesson from history... 20th August 2020 · 4 mins read
Asset Allocation Update The possible winners and losers from Biden’s tax plans While Joe Biden has said that he would clamp down on the US companies, particularly in the technology, pharmaceutical and biotech industries, who book much of their earnings in tax havens, we think... 12th August 2020 · 6 mins read
Asset Allocation Update How COVID-19 may affect US vs. European equities It may seem surprising that the MSCI USA Index has broadly kept up with the MSCI Europe Index in common-currency terms since 8th June, given the simultaneous surge in cases of COVID-19 in the US while... 20th July 2020 · 4 mins read
Asset Allocation Update We think that US REITs could outperform US equities 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... 16th July 2020 · 6 mins read
Asset Allocation Update Treasuries post GFC & COVID: Spot the differences 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... 9th July 2020 · 4 mins read
Asset Allocation Update Negative real TIPS yields a boon for many other assets 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... 24th June 2020 · 5 mins read
Asset Allocation Update Thinking through the effects of possible second waves 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... 17th June 2020 · 4 mins read
Asset Allocation Update Low inflation limits downside risks for bonds 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... 5th June 2020 · 5 mins read
Asset Allocation Update Volatility gauges point to more gains in S&P than USTs 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... 29th May 2020 · 2 mins read
Asset Allocation Update Equities likely to beat bonds amid financial repression Although US equities still have 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... 22nd May 2020 · 5 mins read