Global Asset Allocation Views – August 2023

(SUW – strong underweight, UW – underweight, N – Neutral, OW-overweight, SOW – strong overweight)

 Equities   n  Economic data show signs of resiliency, Inflation rates are trending down, and central bank rate hikes are close to the end. However, valuations, especially in the US are not cheap compared to fixed income assets. Tight monetary policies, recession fears and declining earnings still present headwinds. 
Asset ClassBonds  n   Elevated inflation rates, though declining, are potential risks to bonds.  The Fed hiked rates in July and may hike again in September given the current inflation rate, especially the core inflation, is still higher than the 2% target.
 Real Assets n    Declining inflation and economic growth concerns reduce the demand for commodities and real assets.  Real estate, especially the office buildings, could present another potential risk.  However, geopolitical risks may provide some short-term support to commodity prices.
 Cash     nCash offers attractive yields, low duration, and a good place for liquidity.

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