The uncertainty is part of the reason Barclays is advising its clients to scale back their exposure to equity risk. Although trade isn’t the sole reason for the firm’s new “mild underweight” position, a confluence of events has it reassessing the conviction to hold stocks over bonds.
“It seems to us that the most important risks on both sides – sharply higher inflation and much tighter monetary policy, an economic recession, an economically costly ‘trade war’ or geopolitical event, and costly regulatory push-backs in systemically significant industries like tech – all pose larger threats to equities than to bond markets,” analysts, including the firm’s head of macro research Ajay Rajadhyaksha, wrote in a note Tuesday.
This article was provided by Bloomberg News.