Riskier asset classes have rallied on hopes that the monetary taps will open once more. But the stimulus will be more modest than markets expect.
05.08.2019 | 11:37 Uhr
Asset allocation: priced for perfection
Global equity markets have raced to all-time highs as investors have bet that central banks around the world will open the monetary taps to arrest an economic slowdown.
However, we don’t think economic conditions justify the amount of stimulus financial markets have discounted. While a recent deterioration in economic data suggests that world growth will come in at a below-potential at 2.2 per cent this year, a slowdown of this magnitude doesn't warrant an aggressive easing of monetary policy.
For these reasons, we remain cautious on equities – and have therefore kept our underweight stance on the asset class.
It’s hard to be positive on bonds either, at a time when a record USD13 trillion of global debt is yielding below zero. We
maintain our overweight in cash.
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