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The ticket to outperformance this year is as simple as betting the Federal Reserve will temper its tightening plan — and do the bull market’s bidding, according to investors that help oversee a combined $1.4 trillion.
Armed with dovish monetary bets, they’re pouncing on risk assets of all stripes across the globe — but snubbing Europe.
The Fed is “at the mercy of the markets,” said Wouter Sturkenboom, Northern Trust Asset Management’s Amsterdam-based chief investment strategist for Europe and Asia. “That’s why we have re-instigated a risk position” across stocks in the U.S. and emerging markets at the expense of investment-grade bonds, he said.
The firm, which oversees about $1.1 trillion of assets overall, sees clear sailing for the rally for now.
The five-year U.S. government bond yield would need to rise “meaningfully” to give the central bank the green light to push ahead with its indicative tightening plan, according to Sturkenboom.
