Tactical Investment Strategy, November 2021

November 1, 2021 — In Q4 we expect the economic recovery to continue as the Delta variant’s initial impact on data fades, but for the overall growth trend to moderate. Several macro variables will continue to complicate the outlook for investors, including concerns regarding China’s slowdown and credit issues, upcoming policy withdrawal from the Fed, and fears of more persistent inflation pressures. Despite these risks, we expect the growth, earnings, and liquidity backdrop to support risk assets into year-end, and for favorable technicals and stable spreads to mitigate rate-related damage in fixed income. The primary risk to this view, which is key to both the growth and inflation outlook, will be how quickly supply chain disruptions ease.