###Quarter-end Rebalancing....>

GLOBAL MARKET/OPINION: ###Quarter-end Rebalancing Favours US Bonds Over Equities

But European Equities Over EGBs.

- POV. The Month, Quarter and Year-End is Friday. The month-end duration

extensions are modest in the US (0.07Y) and Europe (0.01Y) but what about the

asset re-allocation between equities and bonds?

- In Q4 (so far), the S&P has risen 6.4% but the US Bloomberg-Barclays Aggregate

 bond index is flat. Thus, a balanced fund would need to reallocate from

equities to bonds. In terms of comparison, this would be the 76th percentile

swing towards equities when looking at asset reallocations over the past 10

years of quarter ends. This is based upon a 60/40 asset allocation favouring

equities.

- By contrast. In Europe, the Eurostoxx is DOWN 1.25% but the Bloomberg-Barclays

aggregate bond index is up 0.75%. So European investors will need to swing

TOWARDS equities and AWAY from bonds. This would feature as a 41st percentile

when mapping out the bond to equity swings over the past decade.

- EGBs don't see much month-end or quarter-end help on Friday.