Asset Allocation Update Is China’s stock market relatively appealing? The news that the authorities in China plan to “optimise” their response to the pandemic while not abandoning their zero-COVID policy has coincided with a surge in its stock market. There is still a... 11th November 2022 · 6 mins read
Asset Allocation Update UK HY corporate bonds may not stay bottom of the class We doubt the recent underperformance of UK high-yield corporate bonds relative to those in the euro-zone will continue given the relative outlooks for monetary policy and economic growth. 10th November 2022 · 4 mins read
Global Markets Update Tougher times may lie ahead for Brazil’s markets Brazil’s financial markets have been some of the world’s best performers lately, supported in part by the prospect of centrist policymaking by incoming president Lula. With the presidential election... 8th November 2022 · 4 mins read
Global Markets Update Market strains create new dilemmas for central banks As the recent breakdown of the UK Gilt market illustrates, policymakers face an increasingly difficult trade-off between combating inflation, supporting economic growth and maintaining financial... 26th October 2022 · 10 mins read
Asset Allocation Update Unpacking the fall in the valuation of the UK stock market Despite stabilising a bit recently, the valuation of UK mid- and large-cap equities in general has fallen recently in both absolute terms and relative to comparable indices elsewhere. While that doesn... 25th October 2022 · 4 mins read
Long Run Update We expect mediocre long-run returns from Chinese equities Although relatively low equity valuations sometimes point to a greater chance of outsized returns over longer time horizons, we do not think that this is the case for China’s stock market. After all... 20th October 2022 · 5 mins read
Asset Allocation Update High FX-hedged Gilt yields may be short-lived The spread between the 10-year Gilt yield hedged in US dollar terms and the 10-year Treasury yield has widened dramatically of late. But given our forecasts for short-term interest rates in the UK and... 14th October 2022 · 4 mins read
Asset Allocation Update What to make of gold’s resistance to the surge in TIPS yields We suspect that the reduced liquidity of inflation-protected Treasuries vis-à-vis their conventional counterparts is one reason why the price of gold has not fallen as much as might have been expected... 14th October 2022 · 5 mins read
Asset Allocation Update Sector allocation as the economic outlook darkens We think that traditional “defensive” sectors of the US stock market – consumer staples, health care and utilities – will continue to hold up better than “tech-orientated” sectors – information... 12th October 2022 · 6 mins read
Global Economics Update From inflation crisis to financial crisis? Problems at California-based lender Silicon Valley Bank (SVB) have refocussed attention on financial sector risks. In light of this, we are resending a report from last October that provides a... 11th October 2022 · 5 mins read
Asset Allocation Update We don’t expect the relative rout in US REITs to persist Although we think that US equity REITs may have further to fall, we don’t expect them to continue to underperform the broader US stock market. The key reason is that we don’t expect Treasury yields to... 7th October 2022 · 5 mins read
Asset Allocation Update US equities aren’t bound to recover if Treasuries do We think the US stock market will fall further even after Treasury yields drop back, as the equity risk premium rises and expectations for earnings are downgraded amid a deteriorating economic... 7th October 2022 · 3 mins read
Asset Allocation Update Fiscal credibility key for Gilts & sterling Although the latest sell-off in Gilts has been driven in part by expectations for higher interest rates, the accompanying fall in sterling suggests the risk premia attached to UK assets has risen. In... 27th September 2022 · 5 mins read
Asset Allocation Update Three key threats to equities from rising bond yields The surge in bond yields that has accompanied the ratcheting up of rate expectations in the US has soured the outlook for the stock market there in three key ways. First, by raising the required... 23rd September 2022 · 5 mins read
Asset Allocation Update What would a policy shift do for China’s markets? The outlook for China’s economy has deteriorated recently, but it still doesn’t look like the PBOC will ease policy much in response. We suspect that if the central bank were to have a change of heart... 16th September 2022 · 5 mins read
Asset Allocation Update What moves in oil prices might mean for markets The recent decline in oil prices has weighed on some equity market indices and come alongside a decline in US inflation compensation, but we don’t think those moves will unwind much even if, as we... 15th September 2022 · 4 mins read