Outlooks

Our valuation driven process bore fruit during the quarter, following our rotation into Europe and holding our nerve with China at our January rebalance. There are natural questions over how much this dispersion of returns in equity markets has to run. We're comfortable holding our positioning, knowing that our disciplined rebalancing will take profits in the regions and add back into the US underperformance, whilst maintaining our diversified exposure.

We still believe bond markets are not reflecting the risks of inflation, and the incoming data has been supportive of our view that service sector inflation and wages are proving sticky. Markets are starting to come around to our way of thinking, with the yield curve steepening, but it still offers slim compensation for any shock, in our view.

‍