Tactical Asset Allocation

Markets took a more noticeable pro-risk turn in February, following a mixed and volatile start in January. Global equities outperformed fixed income, with emerging markets matching US equities and outperforming other developed markets. Credit markets outperformed sovereign fixed income, with credit spreads tightening to cycle lows. The renewed increase in risk appetite was supported by a broadly favorable earnings season, with the US, Japan, and emerging markets ex-China still leading the way with upward revisions in earnings expectations, while the eurozone, UK, and China disappointed.