Asset Allocation | Portfolio Updates
Asset Allocation Update: Fragile Markets and Cash
- By Bilal Hafeez
- 2 min read
Our core investment view remains the same. Markets are fragile, preservation of capital is paramount, and cash is king.
This is a transition year, ending the era of low interest rates since the Global Financial Crisis (Chart 2). So, while equity markets bounced after the Fed reassured with a 50bps hike, rather than 75bps, we should not lose sight of the amount of rate hikes to come. The Fed could raise policy rates to the 5.25% peak of the 2000s or even 8%.
In this environment, we are likely to face constant sharp market moves. The latest was the Chinese yuan plunging, but other markets are likely to follow in the months ahead. We are tracking extreme market moves on a weekly basis.
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