The latest wave of the pandemic is delaying a return to (a form of) normal, adding to constraints on production, a slower resumption in services, a squeeze on margins and rising prices. Still, the shift towards less accommodative monetary policy seems inevitable.
Earnings have continued to recover unabatedly, contributing to the surge in equities, even if valuations on some indices are high and near-term earnings forecasts may be over-optimistic. One supporting assumption in the markets appears to be that the rise in long-term bond yields will remain orderly.
Watch our monthly asset allocation video entitled The Delta dilemma with chief market strategist Daniel Morris for more details on our views and positioning in the various asset classes
