Matthew Hinman

As we embark on Q3, the geopolitical landscape has become increasingly volatile. In response, we have trimmed select equity exposures in favour of commodities, particularly following the full retracement in oil prices after the temporary ceasefire between Israel and Iran. This reallocation is intended to offer downside protection should Middle East tensions resurface or if potential inflationary pressures reemerge. On the macro front, the dichotomy between US hard and soft data appears to be contracting.

While soft data has been subdued for some time, we are now seeing hard data begin to deteriorate, suggesting the economy may be losing momentum more broadly. In fixed income, we continue to favour sovereign bonds. Credit spreads remain compressed and, in our view, do not adequately compensate investors for the additional risk, especially amid an uncertain macro backdrop. Our overweight positions in China, Emerging, and Frontier Markets have been vindicated by strong recent performance. These markets have benefited from persistent US dollar weakness, a trend we expect to continue barring a significant market disruption.

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