Tactical Investment Strategy, October 2020

While markets experienced a rocky September following a very strong August, evidence points to further economic recovery and upside in risk assets. Data should remain supportive with post-lockdown growth above trend, an accommodative Fed, and favorable sentiment. As such, we retain our recovery positioning, with tilts toward equities and higher-yielding fixed income. Less attractive valuations and rising geopolitical risk have, however, prompted several tactical adjustments recently to position for continued market volatility and a recovery with less upside surprises.