Chris Ainscough

US trade policy brinkmanship significantly increases inflation risks through tariffs and supply chain disruptions while fiscal policy will remain loose. Such a backdrop will likely force the Fed to maintain rates higher for longer and put upward pressure on yields. Regardless, we see diversification benefits in UK and US 10 year sovereign bonds, as well as short term pan-European credit.

While we expect volatility to remain elevated in the short term, we do not view this as an opportune time to reduce risk exposure within portfolios. We will continue to monitor the balance of risks to US equities, but as of now we remain comfortable with balancing exposure to parts of the market with stretched valuations with equivalent equal weighted indices. We see cyclical stocks around the world as a risk diversifying source of returns as major developed economies look inwards in search for growth and resolutions to major geopolitical frictions come into view.

‍