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Investment expertise

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.


  • MONTHLY INVESTMENT OUTLOOK - Yields begin their rise
  • GLOBAL TACTICAL ASSET ALLOCATION - Staying pro-risk while actively managing risk
  • UBP ECONOMIC OUTLOOK -  Growth at moderate pace
  • UBP ECONOMIC OUTLOOK - China: targeting common prosperity
  • GLOBAL BONDS - Avoiding long-duration debt
  • GLOBAL EQUITIES - Stick with high quality stocks
  • RECENT VIEW CHANGES - Rotating some long duration equity into banks

  • Global equities and global bond prices fell in the month as the seasonally weak, worst month of the year (September) lived up to its reputation.
  • With the Fed and the European Central Bank both signalling their intent to taper in the months ahead combined with rising energy prices going into winter spurring inflationary concerns, bond yields on both sides of the Atlantic have begun the rise highlighted last month.
  • With German 10-year yields having moved to the upper end of their recession range vs. 2-year yields, the tapering by the ECB suggests that a re-rating out of this recession range of 0-50 bps appears likely looking ahead. Such a re-rating should lead German 10-year yields to rise to breach the 0% bound for the first time since early-2019.
  • The coordinated move on the part of the US Federal Reserve likely means that US 10-year yields will follow their German counterparts higher leaving intact our expectation for 1.7-2.0% looking towards year-end.
  • Like in 1H21, this rising yield backdrop may bring rotation in markets with financials offering some shelter against these rising yields. As a result, tactically, we have augmented our positions in US financials ahead of this next leg of expected yield strength.
  • However, with strong earnings growth already leaving broader market PE multiples nearly 15% below their 1H peaks (when yields last traded near 1.7-2.0%) this suggests a more modest PE contraction potential should our outlook on Treasury yields play out in the weeks ahead. So, while the move in yields will attract attention, we believe investors can instead begin to shift their focus to earnings season which is set to begin in earnest in October.
  • Recall that since the US lockdowns ended in 2Q20, a substantial portion of earnings upgrades have taken place on the back of earnings season surprises. Indeed, in 2021, nearly 70% of the S&P 500’s 16% YTD return has been delivered during earnings season driven by the accompanying earnings upgrades.
  • Consequently, while tactical opportunities may emerge amidst the resetting of US and European yields, we continue to be focused on quality, earnings driven returns looking through year-end.
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Investment Outlook 2021

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