The end of QE
A small post to note the end of QE.
All part of the tightening process, that’s underway, for monetary policy, in response to very strong employment, output and inflation data.
We remain underweight fixed income, albeit are narrowing our underweight in AGB’s as yields march higher (in other words, as we get paid better yields to take on duration, we narrow our underweight).
We continue to see credit spreads as unattractive. Conor Sen (bloomberg columist) puts it well, when he notes “on risk on days, credit underperforms due to the rising risk free rate component, on risk off days, credit is underperforming due to the rising spread component“.
We agree, and hence are not adding credit exposures to the funds.
We did buy some international equities post the 17% fall in European equities, which appears somewhat fortuitous timing based on overnight market movements.
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