Leading indicators point to “risk-on” cyclical outlook - Sep. Macro Snapshot

The risk of a tactical wobble (weak seasonality, stretched CTA exposure) does not take away from the bigger picture that the cyclical macro backdrop is improving. The Q3 US growth scare is starting to fade, global liquidity is rising, and most central banks are easing in sync.

We would look to start shifting away from our balanced allocation, preferring equities over fixed income. We are not blind to high valuations in the US indices, but we see pockets of relative value in the energy and healthcare sectors as well as select emerging markets. Within fixed income, we continue to prefer TIPS vs nominal bonds.

• Cyclical Asset Allocation: Leading indicators show “risk-on” tailwinds, as US growth scare fades
• Cyclical Asset Allocation: Improving macro outlook driven by liquidity, policy and growth
• US Growth: Still resilient growth LEI, as GDPNow and services recover
• US Growth: Household savings rate falls again, fiscal deficit remains large
• US Inflation: First sign of inflation pass-through, one to keep an eye on
• Equity: Earnings LEI steady but high US valuations suggest being selective
• Fixed Income: Tactical signals suggest long-end yields biased higher
• FX: Tactical and cyclical bullish indicators aligning for a US dollar rebound
• Commodities: Commodity outlook continues to improve, stick with gold exposure