Allocation Views
Also Interesting
Perspective from Franklin Templeton Multi-Asset Solutions
Divergence extends, raising concerns
When we wrote about our Allocation Views last month, we were concerned about expectations that showed a notable divergence between financial markets. Heightening these concerns was a further rally in developed stock markets, which recorded new all-time highs in June, at the same time global bond yields fell and central banks indicated a willingness to consider cutting rates. Risk assets have appreciated on the back of improved sentiment, buoyed by expectations of lower interest rates and ample liquidity in the major economies. Similarly, investments denominated in the local currencies of emerging markets have been boosted by the support their own monetary authorities have been able to give. With easier financial conditions in the United States, emerging market currencies have made modest gains, further enhancing returns from local currency bonds.
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