Asset Allocation Monthly – February 2018

07 Feb 2018


  • Global equities sold off aggressively as higher bond yields finally dented the strong January risk rally
  • The sell-off was triggered by strong hourly earnings data in the US, but its magnitude appears to be exacerbated by market technicals
  • Solid growth fundamentals and limited contagion from the equity volatility to other markets such as rates, currencies and emerging markets (EM) are consistent with a technical dislocation in markets

Asset allocation:

  • We remain constructive on equity markets where the fundamentals are strong such as Europe, Japan and EM
  • We remain underweight fixed income structurally given the risk of higher inflation and higher rates, but we have taken profits tactically after the sharp selloff in Bunds
  • We have taken profits on our long US versus UK inflation
Download to read more