A wrap up of the Asset Allocation team's latest thoughts on four topics: high yield, trade, Brexit and US interest rates. All handily recorded into bitesize chunks of TV and radio. Stay classy.
Guest anchor on Bloomberg is likely as close as I'll ever get to comedy icon Anchorman Ron Burgundy. The hour and half on a combination of TV and radio offers a great opportunity for us to discuss a wide range of topics that matter to us right now as investors.
High yield credit spreads have widened since late October, and are back to mid-2016 levels. Helped by a lack of market liquidity causing spreads to gap wider, we've increased our high yield allocation, reducing our underweight stance (along with credit more generally).
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All eyes are on the G20 meeting, with the hope being that Presidents Donald Trump and Xi Jinping can find a framework to defuse the trade war. We'd question whether recent behaviour suggests that's likely.
In the UK, trade is also at the heart of market concerns on Brexit; there isn't currently a majority for any one of Prime Minister Theresa May's deal, a hard Brexit or a second referendum, but something will likely have to give.
The US Federal Reserve faces very different challenges, with low unemployment and rising wage inflation supporting continued rate hikes. We think that markets are focused on the wrong metric though, with the end of quantitative tightening likely to gain more focus in the next three months.