The recent political crisis in Italy has come and gone, but trade wars appear here to stay. U.S. growth leadership will fade in our view as Europe and Japan improve. China is resilient and the U.S. dollar rally is running out of steam.
Trade-war tightrope
The dual headwinds of Italian political volatility and escalating trade-war fears have not stopped equity markets from staging a choppy rebound from their March 2018 lows. The U.S. 10-year Treasury yield has found stiff resistance to moving above 3% and the strengthening U.S. dollar has put pressure on emerging markets asset classes.
Our cycle, value and sentiment decision-making process holds us at a broadly neutral weighting on global equities. We have a small preference for Europe, Japan and emerging markets over the U.S., and expect that the U.S. 10-year Treasury yield has limited upside. We see the U.S. dollar bounce as having run its course.
Read the full Q3 report here.