Living with COVID?

We see equity markets transitioning to a slower, but more sustainable, pace of
gains as countries vaccinate and learn to live with COVID-19. US and European equities remain preferred. We view Asia ex-Japan and China equities as core holdings, but await more attractive entry levels.

Markets are likely to focus on the timing of Fed tapering of bond purchases, China’s policy direction, inflation expectations and the effectiveness of COVID-19 ‘vaccinateand- normalise’ strategies.

We expect gradually higher US bond yields once excessively bearish Treasury positioning eases as growth remains well-supported. Gradually rising Treasury yields would not alter our weak USD view and preference for riskier bonds.