- The strong risk rally may appear reckless amid resurgent Covid-19 cases, persistent risks of a hard Brexit and a (likely) split new US government taking office in January.
- Yet markets are right in pricing recent vaccine news as a game-changer for the pandemic while central banks remain committed to extended stimulus.
- We thus slightly extend our pro-risk tilt, favouring Credit and (more prudently) Equities.
- A weakening US dollar favours exposure to Emerging Markets (EMs). Cash and Core Government Bonds remain unattractive.