- Watch for increased market volatility, as markets are likely to pay close attention to US economic data in the coming months
- Shift some equity exposure from the US:
- to Europe, where earnings expectations do not appear to have adjusted to the modestly improved economic climate, and
- to parts of Asia such as China, which seems to be pricing an excessive probability of a hard landing that now seems much less likely
- Extreme reactions in some markets, including US municipal bonds and certain emerging market stock and bond markets, have created tactical opportunities
- Spreads on emerging market corporate bonds over developed markets are at historic highs, creating opportunities in all three major emerging market regions.
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