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This late cycle stage does not call for dramatic portfolio changes just yet, in our view, but we are moderately trimming equity exposure and shifting toward value areas of the market, while also dialing back credit risk in fixed income. Following are our thoughts about portfolio positioning for Central banks may diverge as they adjust policies to varying stages of economic activity.
We foresee continued growth in developed economies, and inflation holding near targets. This will allow gradual policy adjustments to continue, but the U.
The Fed is forecasting three rate hikes in Wildcards could be inflation and trade developments. The burst of GDP growth in H2 will, in our opinion, give way to slower momentum as the impact from fiscal stimulus wanes.
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But even if growth pulls back to 2. Yield curves should remain flat, but not invert, in as the Fed moves toward pausing. Credit spreads will remain subject to equity market volatility. We recommend preferreds for attractive returns and maintain our bias for 15—20 year higher-coupon munis. The Canadian economy is widely expected to grow at or slightly above its potential in The Bank of Canada recently signaled there will be more hikes beyond than the market is currently pricing in. If this becomes the likely outcome, we believe yields would be set to rise across the yield curve.
We are more comfortable buying short to intermediate maturities that offer lower expected volatility of returns, good liquidity, and an opportunity to reinvest at more attractive rates if the central bank follows through. Our Canadian credit outlook is mixed. We continue to recommend upgrading credit quality and liquidity within portfolios. Preferred shares suffered bouts of volatility this year, and with much more reasonable valuations we view any weakness as a buying opportunity. We doubt the path of future interest rate hikes will change much, given estimates of weaker GDP appearing by the end of or in early Another notable risk that may materialise after March is the potential for a leadership challenge within the Conservative party and a general election.
China represents half of the USD-denominated Asian credit market. In our view, fundamentals and market sentiment in China are two of three key drivers of Asian bonds. Onshore funding liquidity in China is tight and issuers struggle to refinance their debt as the government treads along its deleveraging path. The significant market correction in has opened up selective investment opportunities, but overall we remain cautious and prefer to see a stabilization of liquidity and market confidence before turning risk-on.
We are also cautious on Indonesia and India. The corrections in exposed stresses in the global equity market but also reset valuations to more reasonable levels. We think the market has the capacity to absorb economic cooling, ongoing tariff risks, and monetary tightening, albeit with volatility.
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However, the agreed accord must now be passed into law by the three signatories, which cannot be taken for granted in this contentious political climate. Robust economic growth against a tight labour market point to the need for further rate increases by the Federal Reserve. The Fed is forecasting three rate hikes in Just follow this link to the website to browse their current offerings. This sale will end soon! Time for you to apply Callitspring.
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