Supply shock = central banks’ headache
- The global recovery still has legs, keeping corporate earnings and risk sentiment underpinned.
- Yet mounting uncertainties over the energy crunch and central banks’ response to more sticky inflation are making us more prudent.
- We scale back our overweight in Equities and HY Credit, adding to overweights in IG Credit and Cash. We keep a prudent short duration stance, anticipating only a gradual further rise in yields.