Shifting Momentum

The "Shifting Momentum" webinar hosted by T. Rowe Price's Multi-Asset Division focused on navigating the current uncertain policy environment and tactical asset allocation positioning. Here are three impactful takeaways:

1. Market Positioning and Tactical Adjustments: Sébastien emphasized the importance of a flexible, non-one-size-fits-all approach to asset allocation. The Asset Allocation Committee (AAC) has moved to a neutral stance on stocks versus bonds, reflecting caution amid market volatility. They have reduced credit exposures and are benefiting from diversification within stocks, particularly through overweight positions in value and international stocks. This approach aims to mitigate risks associated with peak market concentration in U.S. large-cap stocks and potential inflation shocks affecting U.S. Treasuries.
2. Economic Sentiment and Earnings Outlook: Despite deteriorating consumer and business sentiment, hard economic data like jobless claims and nonfarm payrolls remain stable. Sébastien noted that sentiment often provides contrarian signals, suggesting opportunities to add risk when panic is high. Earnings are expected to grow by 8-10% this year, with companies increasingly providing split forecasts to account for uncertainty and Eric Veiel highlighted the importance of understanding these scenarios to make informed investment decisions.
3. International Opportunities and U.S. Exceptionalism: The team discussed the potential end of U.S. exceptionalism, with a tactical shift towards non-U.S. stocks, particularly in Europe and Japan. This shift may have been driven by relative valuation opportunities and catalysts like Germany's economic stimulus and the normalization of interest rates benefiting European financials. While the long-term dynamism of the U.S. economy and tech sector remains attractive, current geopolitical and economic dynamics favor diversification into international markets.

Watch The Replay Here

ADDITIONAL DISCLOSURES

Source: T. Rowe Price. Unless otherwise stated, all market data are sourced from FactSet. Copyright 2025 FactSet. All Rights Reserved.

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