Current views - September 2018
Cazenove Capital's investment team assesses the prospects for a range of asset classes and currencies
Improved valuations following on from strong earnings growth.
We prefer USD bonds versus EUR and GBP bonds, particularly inflation-linked bonds.
Attractive diversification characteristics compared to equities and fixed interest.
Cash has defensive and opportunistic qualities in uncertain and volatile markets.
The UK is now one of the slowest growing economies in the G7. Brexit uncertainty means we remain cautious.
Slowdown in domestic economic growth, increased trade tensions and Italian politics could hamper earnings.
Strong US consumer and tax reform are supportive to earnings growth.
Upcoming elections and weak economic data reduce the relative attractiveness of Japanese equities.
Solid and consistent earnings growth is supportive, but trade war remains a headwind.
Valuations look attractive relative to Western developed markets, but trade war remains a headwind.
US Treasuries are relatively more attractive given the normalisation of yields that is taking place. We are cautious on European government bonds.
Returns are likely to be driven largely by government bond markets. We see opportunities in some shorter maturity areas of the markets.
High-yield credit spreads are at a historically low level compared to Investment Grade credit and Emerging Market Debt spreads, so we remain wary.
Inflation-linked government bonds remain relatively attractive compared to conventional government bonds and will outperform if inflation expectations rise.
Emerging market bonds offer good value across the board, but struggle amid a stronger US dollar.
Increased volatility and dispersion should provide opportunities. We favour trend followers and long/short strategies.
Commercial property (UK)
Post-Brexit concerns have resulted in the marking down of property valuations, but income characteristics remain attractive.
Gold is attractive as a diversifier, portfolio insurance and an inflation hedge.