Global economic growth is expected to slow, so investors should skew their portfolios more heavily to bonds, according to analysts at Barclays Capital. Equities aren’t expected to rally in the months ahead, and volatility should continue for both equities and debt. Commodities remain a good bet, according to the analysis, and the dollar is expected to remain weak, although the British pound is likely to also weaken.
“It is critical to distinguish between two separate causes of the recent re-pricing of credit — the lack of liquidity and forced selling, and changes in judgments about fundamental credit quality,” noted Larry Kantor, co-head of research. He expects these two factors to decouple in the coming months.
