- Receding political risks, tender economic greenshoots and accommodative central banks haveunderpinned risk assets, benefitting our pro-riskstance.
- Markets are already discounting a lot of good news, warranting a somewhat more cautious tactical allocation stance into year-end.
- That said, a Goldilocks ‘light’ environment is still boding well for risk sentiment. Low inflation, bottoming but subpar growth and sustained monetary policy support will keep a lid on core yields while still underpinning risk assets.
- We maintain overweight in Credit and Equities vs. Core Govies and Cash, but reduce the size of active positions.