Asset Allocations: Interest-rate sensitive bonds may be the most attractive asset in the near term.
Change from previous quarter
|U.S. large cap|
|U.S. small cap|
|Non-U.S. developed country|
|Investment-grade corp. credit|
|High yield corp. credit|
|Floating rate loans|
|Residential mtge. credit|
|Commercial mtge. credit|
Currency viewsU.S. dollar versus
|Favor other||Neutral||Favor dollar|
Equities to remain under pressure
Stocks could rally on any signal of lower inflation, but we would view bear market rallies as opportunities to reduce equity exposure.
Rate-sensitive bonds look attractive
Treasury yields rose above 3% in Q2 and stock-bond price correlations became negative again, making rate-sensitive bonds a possible choice for those taking profits on equities.
Commodities may be challenged
Current energy prices are high and supplies are extremely tight, but the prices of futures contracts might drop if we see signs of a global macroeconomic slowdown.