13.04.2021 - The remarkable economic progress since the depths of the pandemic-induced recession has a catch: It’s no longer an early-cycle environment everywhere. We believe this means investors should adopt a more selective, discerning approach.
- Invest in regions where it’s still early cycle, like Europe and emerging markets: We believe that goods activity is strong globally and poised to stay so, with uneven vaccine access producing dispersion in service sector recoveries.
- US stimulus support appears to have peaked, and future policy actions are likely to include both higher spending and higher taxes. This reinforces our preference for procyclical, value, and international equities relative to broad equity beta.
- A tactical, temporary pause in the US Treasury selloff should catalyze a reversal of US dollar strength. Broadening economic momentum outside the US will likely sustain dollar softness.
- Emerging market currencies stand to benefit from fading headwinds and a turn in sentiment.