Investment Clock
The Investment Clock that guides our asset allocation remains firmly in Overheat. Our growth leading indicator improved at the margin as consensus forecasts were upgraded in the eurozone. Trend measures remain robust. The improvement is synchronised across regions and the overall growth reading is at its highest level since 2003. Our global inflation score was largely unchanged over the month and remains at an elevated level. The leading component improved but it is now close to maximum positive which will limit improvements in future months. Similarly, the trend component is positive across all regions. 
The Investment Clock has been in the “Overheat” phase of the economic cycle for the best part of a year. This phase of the economic cycle has historically supported commodities and the asset class performed strongly over 2016. This phase also tends to see central banks hike rates to cool an overheating economy. The Fed remain the only major central bank with a tightening bias but if data continues to improve the ECB may begin to remove some of the extraordinary stimulus measures. 

This document is intended for use by advisers and wholesale investors. Retail investors should not rely on any information in this document without first seeking advice from their financial adviser.

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