- Our outlook for moderate U.S. economic growth remains intact, while some late-cycle signs of slowing growth affirm our view that a sustained economic reacceleration is unlikely.
- The risk of rising interest rates has moderated, as inflation pressures have eased somewhat and the Fed has hit pause on rate hikes.
- European GDP growth should remain positive in 2019, but overall growth in Europe remains low and continues to face structural headwinds.
- In Asia, signs of slow but improving economic trends in Japan contrast with economic deceleration in China, but Asian markets stand to benefit as trade tensions ease.
- We favor U.S. equity sectors with both cyclical and secular tailwinds, like Information Technology and Communication Services, and sectors with limited economic sensitivity, like Consumer Staples and Utilities, while avoiding the most economically-cyclical sectors.
- We remain underweight international equities, overall, but see better international opportunities in Asia, where modest growth expectations and low relative equity valuations have improved the region’s risk/reward profile.
- Emphasis on short-duration fixed income securities limits interest rate risk at little cost in yield.
• U.S. Information Technology Equities
• U.S. Treasury Securities
• U.S. Financials Equities
• Short-Duration Fixed Income
• U.S. Health Care Equities
• U.S. Industrials Equities