Market expectations for strong economic growth and still generous fiscal and monetary policies should underpin risky assets in the second half of 2021, even in the face of uncertainty over the moment when the US Federal Reserve starts unwinding its support and begins raising interest rates.
Most recently, the Fed indicated in its closely watched ‘dot plot’ that the fed funds policy rate would rise by 50bp by the end of 2023, which was sooner than most investors had expected. We expect bond yields to rise, with the increase driven primarily by rising real (inflation-adjusted) yields.
For more details on our views and positioning in the various asset classes, watch our asset allocation video with chief market strategist Daniel Morris
Please note that this publication will take a break for the summer. The next issue will be published in September.
Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice.
The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.
Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).
Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.
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