Global growth is recovering from the 2020 slump and inflation pressures are building. Our Investment Clock is in Overheat while President Biden is tabling a $1.9 trillion fiscal stimulus and the US Federal Reserve chair says they “aren’t even thinking about thinking about” raising interest rates.
With Covid-19 vaccinations underway and policy staying loose, the pick-up in growth could have much further to run. We are overweight equities, commodities and high yield bonds.
Downside risks could come from the spread of vaccine-resistant virus variants or, more likely, from eventual policy tightening. For now, both virus and macro data lead to us being constructive on markets.