ASR Asset Allocation Survey
Declining Inflation Expectations Have Hurt USD but Helped EM
Major declines in US and eurozone inflation expectations have prompted investors to downgrade their probabilities for higher Fed Funds, higher US Bond yields, and importantly a higher USD … to the benefit of Emerging Market assets.
But Asset Allocators Think Bonds, Not Equities, May Benefit More
Asset Allocators have reduced their implied probability that Stocks will beat Bonds by 11% percentage points, to the lowest level seen in the Survey’s history, amid increased worries about recession, corporate earnings, and higher unemployment.
Bears now in the Majority: Survey’s Portfolio now Overweight Bonds
For the first time, the Bears form the largest group as found by our Machine Learning clusters analysis. This reflects the pessimistic stance of this survey while expectations of lower yields makes the Survey Portfolio overweight Fixed Income.