Market News

Current views at a glance - September 2017

08/09/2017

KEY

Equities

 
 
 

UK

Concerns over ongoing economic strength in light of Brexit overhang and views that the tailwind from weaker sterling may be in the past.

 
 

European

Better economic activity with an undervalued currency and equity market.

 
 

North American

Slightly negative due to fuller valuation alongside concerns over Trump's delivery on pre-election promises.

 
 

Japanese

Better global economy is helping but the domestic economy is still disappointing.

 
 

Asia Pacific

Dollar headwinds are fading and the pick up in global trade is helpful to Asia Pacific.

 
 

Emerging markets

Modest but synchronised global growth should be more supportive to Emerging Markets. 

 

Fixed income

 
 
 

Government bonds

We remain negative on GBP and euro bonds but US Treasuries are becoming more attractive given the normalisation of yields that has taken place.

 
 

Investment grade

Credit spreads provide some pick-up but we prefer short-dated bonds.

 
 

High yield

Credit spreads are at a historically tight level so we would be wary of high-yield spread duration exposure.

 
 

Inflation-linked

Recent gains in inflation-linked government bonds reduce their valuation attractiveness but they are still desirable from an improving economic perspective.

 
 

Emerging market

Selectively, local emerging market bonds offer good interest rate and currency exposure.

Alternatives

 
 
 

Absolute: equity

Increased volatility and dispersion should provide opportunities.

 
 

Absolute: fixed income

Lower liquidity and flatter rate profiles reduce the attractiveness of many strategies.

 
 

Absolute: macro

Increased volatility across many asset classes should counter flatter rate cycles.

 
 

Commercial

Post-Brexit concerns have resulted in the marking down of property, but income characteristics are still attractive.

 
 

Precious metals

Gold is attractive as a diversifier, portfolio insurance and as an inflation hedge.

 
 

Industrial metals

Ongoing excess supply is likely to weigh on prices for some time.

 
 

Energy

Oil continues to be volatile as politics and supply concerns dominate the market.

 

Cash

 
 
 

Cash

Cash has defensive and opportunistic qualities in uncertain and volatile markets.

 

TERMS:

Spread - the difference in yield between a non-government and government fixed income security.

Duration - approximate percentage change in a price of a bond for a 1% change in yield.

The opinions contained herein are those of the author and do not necessarily represent the house view. This document is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Cazenove Capital does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that Cazenove Capital has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Cazenove Capital is part of the Schroder Group and a trading name of Schroder & Co. Limited 12 Moorgate, London, EC2R 6DA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. For your security, communications may be taped and monitored. 

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