United States

Mounting evidence that the labor market is on its way to cracking checked two more boxes on our checklist, driving us to tactically downgrade equities to underweight while upgrading fixed income to overweight. Our tactical and cyclical (6-12 months) views are now aligned as our conviction that a recession will begin before year-end has increased.

The market is pricing in a soft landing, but we see growing signs that the global economy is faltering. Investors should be defensively positioned.

We assess the investment implications of the BoJ and Fed meetings, and give our take on the next policy moves. We also assess the impact on asset markets.

The Fed kept rates steady today, but teed up an initial rate cut in September while putting more emphasis on the employment side of its dual mandate.