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Monthly Investment Outlook

Monthly Investment Outlook

We publish a Monthly Investment Outlook that highlights our convictions on equities and bonds, as well as recent asset allocation changes.



Summary

  • MONTHLY INVESTMENT OUTLOOK - Continuing to pivot alongside the Federal Reserve
  • GLOBAL TACTICAL ASSET ALLOCATION - Earnings are key to driving equities higher
  • UBP ECONOMIC OUTLOOK -  European recovery to take off
  • UBP ECONOMIC OUTLOOK - Major shift in monetary regime ahead
  • GLOBAL BONDS - Constructive on credit but cautious on long-duration debt
  • GLOBAL EQUITIES - All about earnings
  • RECENT VIEW CHANGES - Reducing China down to neutral

  • Global equity markets closed at the half year point higher, while global bonds fell as the Federal Reserve began to signal a pivot change – by potentially slowing the pace of its bond buying, i.e. ‘tapering’ – in its post-pandemic policy regime.
  • Global growth continues to recover but looks uneven across regions; Europe should benefit from reopening services while momentum fades in the US and China.
  • Europe ready to lead Q3 growth, while momentum should fade in the US and China. New variants may fuel downside risks to activity and emerging countries are still lagging the recovery.
  • Monetary policy will progressively shift from an ultraaccommodative stance to one that is more neutral. Several central banks will adapt their strategy to a new growth and inflation environment and have stated their willingness to taper or adjust key rates.
  • Rising inflation has remained the focus of investor concern as economies reopen and stimulus remains fully active. In addition, the recent Federal Open Market Committee meeting was more hawkish than expected, pulling forward the Fed’s time frame for rate hikes.
  • Despite the slightly less accommodative message from the Fed and the spread of the Delta variant, equities once again posted positive performances in June.
  • Since November of last year, we gradually added cyclical exposure alongside long-term transformational growth themes in the equity space to benefit from the global economic and corporate earnings recovery.
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