Below is a quarterly update of Euro Pacific Bank’s mutual fund and separately managed account positioning, related market commentary, and outlook.
US earnings season is positive and macroeconomic data indicating modest growth, but prospects for tax reform and fiscal boosts are diminishing and political risk is increasing.
Recent data has softened concerns around the growth/inflation trade-off for the Bank of England. Potential of an imminent rate rise has faded. With growth forecasts weakening, we do not expect Bank of England tightening until Brexit risks have been reduced.
After a good run, European equities are becoming vulnerable to negative data surprises, although the euro looks set to run again after recent pullback.
Equity market volume globally yet to pick up, as risks remain.
Continued strong performance from our India shares in past two months but we are easing off this week and are looking to take profits on Tactical exposure replacing it with Japan exposure. We will retain India exposure in the Core component of the strategies.
We will adjust the strategies to reflect our market views over the next two weeks. In summary, the main changes are:
- An increase in European exposure
- An increase in Japanese equities
- A reduction in UK exposure
- A reduction in Indian exposure