Speedbumps in a Goldilocks environment

Executive summary

  • We have a short-term negative view on US equities, given high yields.
  • Greater geopolitical risks is on the horizon, driven by escalation of the Israel-Hamas conflict.
  • History suggests that once adverse reactions to geopolitical shocks ‘wash-out’ risk assets can return to previous trends.
  • Led by Developed Market equities, we are positive 12 months ahead on global risk assets, bonds and corporate credit.
  • We remain negative on China and Asia equities.
  • We have turned positive on oil prices and the US dollar.