Cautious
In summary, while the AAC’s index-level views show a moderate underweight in fixed income assets and a largely neutral stance with regard to equity markets and other risk assets, beneath the surface the Committee is preparing for a rotation into a broadly inflationary, risk-on environment. The catalyst for that rotation could be further positive news on trade relations, firmer growth and inflation data, especially from outside the United States, or, perhaps ironically, the first Fed rate cut in more than a decade.
These views remain cautious for now, however, as we wait for seasonal, technical and fundamental dynamics to play out over the coming quarter. By the next Outlook, we hope to see clearer confirmation of the next leg of what is now the longest expansionary cycle in modern U.S. history.
Erik L. Knutzen is chief investment officer, multi-asset class at Neuberger Berman.