Capital Markets Outlook | Q3 2023
Asset allocations: Continue to favor a defensive posture
|
Current quarter Previous quarter Change from previous quarter |
Underweight | Neutral | Overweight |
|---|---|---|---|
| Equity | |||
| U.S. large cap | |||
| U.S. small cap | |||
| U.S. value | |||
| U.S. growth | |||
| Europe | |||
| Japan | |||
| Emerging markets | |||
| Fixed income | |||
| Interest-rate sensitive | |||
| U.S. government | |||
| Non-U.S. developed country | |||
| Emerging markets | |||
| Corporate credit | |||
| Investment grade / High yield / Floating rate | |||
| Securitized | |||
| Residential mortgage credit | |||
| Commercial mortgage credit | |||
| Prepayment risk | |||
| Commodities | |||
| Cash |
Currency viewsU.S. dollar versus |
Favor other | Neutral | Favor dollar |
|---|---|---|---|
| Euro | |||
| Pound | |||
| Yen |
Remain underweight to equity risk
Large-cap equity indexes look expensive and could face further downward earnings pressure.
High-yield spreads are tight
Corporate high-yield bond spreads appear tight relative to volatility and a likely rise in the default rate.
Neutral on commodities
After a volatile quarter, a shift from overweight to neutral for commodities.
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