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Global Macro Price Movements By Asset Class

Published 11/26/2013, 12:26 AM
Updated 07/09/2023, 06:31 AM

Chart 1: Global equities are currently outperforming other asset classes
Global Equities vs. Other Asset Classes
Current financial market conditions are characterised by rising equity prices towards 2007 highs (some major global markets have already exceeded this level), falling commodity prices, falling foreign currency rates and rising interest rates (falling bond prices).

This is a completely opposite to what we saw in late 2007 and early 2008, when financial market conditions were characterised by falling global equity prices, rising commodity prices, rising foreign exchange rates and falling interest rates (rising bond prices).

Chart 2 & 3: Managers remain overweight stocks vs. bonds and commodities
Equity vs Bond Weightings
Equity vs Commodity Weightings
According to the recent November report from Merrill Lynch, global fund managers continue to remain extremely overweight equities relative to bonds and commodities. When looking at it from stand alone basis, bonds exposure is now at one of the lowest levels in a decade, while commodity exposure is also close to record lows. As already discussed in the previous post, equities remain the only game in town for now and as more and more trend followers pile in, we could see a vertical blow off top in coming weeks and months.

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