Asset Allocation for November 2016

In October funds reduced their investments in security market – US elections are hardly predictable.

Investment grade bonds, especially in European region, were under sellers’ pressure last month. The selloff was seen in corporate bonds market as investors started to build expectations of FED rate hike in December into bonds prices. Yields growth pulled down the value of REIT funds that are very sensitive to rate movements.

American equities prices remain stable near year-to-year heights supported by corporate earnings season. From quarter to quarter US companies are beating EPS expectations and continue to grow despite all the estimates understate permanently. That could cause to an imaginary oasis of growing corporate operating results.

In November we’re expecting market volatility growth after the US elections results publication.

Threat and challenges in world markets:
-  Presidential Elections in US (8th November 2016)
-  Systematic economy crisis China
-  BREXIT aftermath – EU disruption and political crisis
-  Monetary policy tightening by US FED

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