The geopolitical backdrop has improved materially given the US and Iran have signed a peace agreement. But it is premature to conclude that energy market risks have fully dissipated.
The US Federal Reserve has taken a hawkish tilt under new Chair Kevin Warsh and the hurdle for policy tightening in the US appears to have been lowered.
We remain constructive on US equities while earnings momentum holds, but the margin for disappointment has narrowed.
Australian equities continue to face a less favourable macro mix given expectations of slowing demand, a softening housing market and a still-hawkish RBA. We are cautious on Australian stocks.
Australian duration has performed well, but the valuation case has moderated and the spread to US treasuries has narrowed.
