Investment Weekly

Chart of the week – Mini growth scare

A mini growth scare has rippled through US markets over the past week or so. Equities are down, so too is the ‘Dixie’ dollar index, and Treasuries have rallied, with the yield curve flattening despite short-term rate expectations declining. Thus far, we see developments as consistent with our “spinning around” scenario. Namely, moderating US growth and frothy valuations in some equity sectors leading to a rotation into markets where expectations still leave room for upside surprises and where valuations are closer to historic norms.