WM Chief Investment Office
18 June 2021

By Standard Chartered Bank

A more confident Fed

The Fed’s upgrade of US growth and inflation estimates and bringing forward of rate hike expectations to 2023 signals its growing confidence in the outlook for the economy.

We believe a sustained economic recovery, a transitory bout of inflation and
a still-accommodative Fed well into 2023 support our view that stocks will continue to outperform bonds and cash over the next 6-12 months.

Equities: We believe Value equities have further room to catch up with Growth
peers and expect Value-biased regions such as Euro area and UK to outperform.

Bonds: Our preference for Emerging Market USD government, Asia USD
corporate and Developed Market High Yield bonds remain intact partly because
of their attractive yields.

FX: The USD index is testing a key technical resistance. We would use the
ongoing bounce to reduce USD exposure.