Global Macro Outlook: Policy Support Holds as Rotation and Risk Signals Build

TopdownCharts
03-31

Global policy remains supportive amid subdued inflation and a gradual economic recovery, but market signals are becoming more mixed.

The US Stock/Bond Ratio is rolling over from stretched levels, pointing to rising caution, while relative opportunities are emerging outside U.S. large-cap growth.

Investors are increasingly balancing supportive macro conditions against weakening technicals and shifting global leadership.

  1. Monetary Policy Pulse: given lack of underlying inflation pressures, steady but nascent global economic recovery; expect policy on hold globally (and to remain supportive for risk assets, growth).

  2. US Stock/Bond Ratio: the stock/bond ratio is rolling over from stretched levels (stretched valuations, positioning, and technicals), history suggests caution (but recession risk is the key variable here).

  3. GSV vs ULG Update: remain bullish on global/small/value vs US/large/growth as the relative technicals and valuation setup is attractive, but wary of technical developments for both groups in absolute terms.

  4. Emerging Markets: wary of deteriorating technicals, but remain optimistic given longer-term technicals, solid earnings/macro momentum, light allocations, and reasonable valuations.

  5. LatAm Equities: there is a solid underlying bullish setup (valuations, FX, policy, earnings), but we need to see the short-term technical test resolved on the bullish side to establish any new position.

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