- Growth should suffer only limited and temporary disruptions from recent hurricanes, but underlying US growth trends should remain intact.
- Renewed discussions on budgetary policy may lead to some tax cuts for households and corporates in 2018.
- The Fed has announced that balance sheet normalisation will start in October. Fed Chair Yellen continues to be sceptical about the significance of the weaker-thanexpected core inflation numbers.
- In this environment, we expect higher yields and a steeper curve. With such low yield levels and especially in a rising rate environment looking ahead, we remain concerned about the prospect of interest rate volatility in USD bond markets.
- We see non-directional bond strategies as an appealing fixed income alternative for USD bond exposure.
- After a period of flattish performance, we have recently added to our US equity exposure as we continue to believe that this late cycle equity bull market still has legs. However, we remain tactically cautious given the fact that valuations relative to other markets have reached a new record high (since the Global Financial Crisis (GFC)).