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.
