Current views at a glance - July 2017
Less positive view given continued uncertainty over Brexit and concern over increasingly squeezed consumers.
Better economic activity with an undervalued currency and equity market.
Full valuation and reduced hope of Trump policy boost.
Better global economy helps but domestic economy is still disappointing.
Dollar headwinds fading and pick-up in global trade is helpful to Asia Pacific.
Domestic challenges and weaker oil price may hold back emerging market equities.
We remain negative on GBP and euro bonds, however, US treasuries are more attractive given the normalisation of yields that has taken place.
Credit spreads provide some pick-up in yields but we prefer short-dated bonds.
High yield spreads are at an historically tight level so we would be wary of high yield spread duration exposure.
Inflation-linked government bonds remain more attractive than conventional government bonds and give protection against unexpected inflation.
Selectively, local emerging market bonds offer good interest rate and currency exposure.
Equity market dispersion should provide opportunities.
Absolute: fixed income
Lower liquidity and flatter rate profiles reduce the attractiveness of many strategies.
Increased volatility across many asset classes should counter flatter rate cycles.
Post-Brexit concerns have resulted in the marking down of property but income characteristics are still attractive.
Gold is attractive as a diversifier, as portfolio insurance and as an inflation hedge.
Ongoing excess supply is likely to weigh on prices for some time.
Oil continues to be volatile as politics and supply concerns dominate the market.
Cash does not yield much but gives opportunistic firepower.
Spread - the difference in yield between a non-government and government fixed income security.
Duration - approximate percentage change in a price of a bond for a 1% change in yield.
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This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.
All data contained within this document is sourced from Cazenove Capital unless otherwise stated.