Looking beyond the taper

‘Talking about tapering’ is now well underway and we expect the Fed to
announce bond purchase tapering by end- 2021. This could create temporary volatility, but strong economic and earnings growth and rock-bottom policy rates mean we retain a preference for equities over bonds.

China’s regulatory tightening may continue for some time, though. We prefer gaining exposure to China via Asian USD bonds, given increasingly attractive valuations.

Fed tapering is likely to result in moderately higher bond yields, but that should not stand in the way of a weaker USD. This leads us to retain a preference for Valuestyle equities and a regional preference for Europe and the US.