We remain pro-risk in our allocation, given strong global growth as pent-up consumer demand is unleashed in the pandemic recovery, and monetary policy remains accommodative.

We continue to see the global economy accelerating in the second half of 2021, as pandemic headwinds fade and service sector activity normalizes.

We believe that the positioning against reflation went too far, with reopening and reflation stocks and long-term bonds trading at January levels (peak of the pandemic). Therefore, we expect the reflation trade (cyclical stocks, bond yields, reopening and reflation themes) to rebound as fears of the Delta variant subside, inflation persists, and economic growth/recovery continues at a rapid pace.

As with everything else, we remain overweight in equities (skewed toward value and cyclicals) and commodities.We are underweight in bonds. We believe long-term rates are at the bottom of this corrective process. We continue to target levels closer to the 1.6%-1.75% range for the 10-year Treasury by the end of 2021, with the yield curve beginning to steepen again. While China's regulatory actions and the spread of the delta variant have continued to be reflected in the underperformance of emerging market assets, in our view, neither variable is likely to derail the solid fundamental picture.

For more information, please refer to the attached report: Market Outlook August 2021