Fed pivot is not around the corner
Tightening monetary policy and slowing economic growth lead us to keep a cautious stance on risk assets, in light of potential liquidity and refinancing issues, particularly in low quality credit. We prefer US IG (over HY) segments and selectively like EM hard currency debt. Core yields on USTs are at attractive levels, allowing us to be neutral but agile on duration. In equities, we continue to play the resilience of US over Europe, but are watchful of the impact of a strong dollar on foreign earnings of US companies. Overall, investors should maintain a diversified stance along with a tilt towards quality assets.