Synopsis
Our framework continues to suggest the economy is in expansion. Looking ahead, we assess the probability of a short-term peak in the cycle over the next few months and place it in context with recent monetary policy developments.
We have implemented no changes in the Global Tactical Asset Allocation model1 and maintain a higher risk posture than our benchmark with an overweight to equities and risky credit at the expense of investment grade and government bonds. We continue to favor equity markets outside the US, and cyclical styles/factors such as value, small caps, and mid caps, despite their recent performance pullback.