Latest from BCA Research

Recent shifts in the Fed's policy stance are bullish for the dollar, negative for commodities and emerging markets, and positive for assets with a yield. They also suggest risk assets will continue to perform decently.

Special Report

In China and the majority EMs, credit impulses will be negative over the next 12 months as and if their credit growth converges towards their current nominal GDP growth. These negative credit impulses will dampen EM/China growth and their corporate profits. In the next 12 months, the credit cycle is most vulnerable in China, Brazil, Turkey, and Malaysia and least vulnerable in central Europe, the Philippines, and Mexico.

Given the rising odds of another Fed move before year-end, and the uncertainty that additional easing can be delivered in Europe and Japan, we re-iterate our tactical call to maintain a below-benchmark duration stance.

Chair Janet Yellen's comments at Jackson Hole reinforce our view that a Fed rate hike is highly unlikely until December. The risk is that overbought equity and junk bond markets correct as an oversold dollar prices in a December move.

The equity rally has been in a holding pattern, with some tactical fraying around the edges.

In August, the model outperformed the S&P 500 and global equities in both USD and local-currency terms. For September, the model increased its allocation to cash and trimmed its exposure to equities.