Looking at this week’s updates from two award-winning asset managers, the focus is on the Federal Reserve: it raised interest rates on Wednesday, the first hike since 2023. UBP, winner of the Asset Allocation Award and the Overall Award earlier this year, maintains a neutral stance on equities and fixed-income securities. Federated Hermes, winner of the Fixed Income Award, aligns with the consensus, recommending an overweight position in equities and an underweight position in fixed income.

House View: UBP

UBP, a two-time winner of the Asset Allocation Awards, maintains its neutral rating for equities and fixed-income securities; we note that the report was published prior to the interest rate hike. Due to persistent inflation, with oil prices being a key factor, the yield on 10-year government bonds was hovering around 4.75% at the time. UBP warned that “a return to tighter financial conditions would mark a genuine regime shift.” The next report in October will reveal whether last Wednesday’s events were significant in terms of changes to asset allocation recommendations.

UBP House View, September 2026↗

House View: Federated Hermes

Federated Hermes, winner of the Fixed Income Award and a finalist for the Asset Allocation Award in 2026, aligns its meeting cycle with that of the Federal Reserve, and its PRISM model remained unchanged following Wednesday’s interest rate hike. It currently has an overweight position in stocks and an underweight position in bonds. Steven Chiavarone, the Chief Investment Officer, raised the 2026 earnings forecast for the S&P 500 from $340 to $370 on September 9, and would “likely view a short-term correction as a buying opportunity.”

Still up and to the right, September 2026↗

What This Means for the Consensus

Federated Hermes aligns with the consensus: overweight in stocks and underweight in bonds. UBP is neutral on both stocks and bonds. With the Fed’s interest rate hike, we’ll see next month whether these successful asset managers make any adjustments. Looking now at the consensus for stocks, 74.1% of the recommendations are overweight. Given that UBP and Federated Hermes have not made any adjustments, a positive outlook on the stock market seems justified.

Reading across three finalists from the Asset Allocation Awards’ thirteen-strong panel this week, the debate isn’t about direction, it’s about which safe assets still deserve the label. Robeco cools on commodities. Amundi holds its ground on fixed income broadly. Candriam goes further, leaning into government bonds almost alone. All three, in their own way, are choosing quality over the crowd.

House View: Robeco

Robeco, finalist for the Asset Allocation Award, has gone flat on Commodities, putting it at odds with a Consensus rating the category Overwogen (net +22.58%, ranked 9th of 25). The reason is narrower than it looks: “We remain cautious but neutral on oil, unable to predict the likelihood of skirmishes between the US and Iran...” the house explains. Gold, a separate line, keeps climbing.

Multi-asset market outlook, September 2026↗

House View: Amundi

Amundi, finalist for the Fixed Income Award, keeps an overall positive rating on both Duration and Credit, against a Consensus that rates Bonds Onderwogen (net −28.2%, ranked 23rd of 25). “We remain mildly constructive on this asset class, in particular high-quality credit,” the house notes, favouring Global Investment Grade on an all-in yield basis. A more dovish Fed and ECB support the duration call.

Global Investment Views, September 2026↗

House View: Candriam

The most contrarian call this week belongs to Candriam, finalist for the Fixed Income Award: long Core European government bond duration, where the Consensus sits at Neutraal with just 22% overweight (net −18.52%, ranked 20th of 25). “The Iran war has led to an inflation-driven repricing... we focus on high quality, core-European AAA-rated sovereign bonds, which enjoy both fiscal and central bank credibility.”

Coffee Break, 7 September 2026↗

What It Means for the Consensus

Two of three finalists find something to like in fixed income, Amundi across duration and credit, Candriam narrowly in core European government bonds, even as the Consensus keeps Bonds Onderwogen (rank 23/25) and Government Bonds Neutraal (rank 20/25). Robeco stands apart: neutral on Commodities, where the Consensus stays Overwogen.

Government bonds are supposed to be the insurance policy against falling equity markets. They no longer offer that. And the category ranked least attractive of the five in this month’s consensus is the best-performing fixed income asset class of the year.

Within fixed income, High Yield ranks last this month. Five categories, one ranking: Emerging Markets Debt overweight, Inflation Linked Bonds and Corporate Bonds neutral, Government Bonds neutral with a slight improvement, and High Yield at the bottom, underweight, unchanged from last month. Spreads confirm the picture. On August 31, the U.S. HY spread stood at 2.65%, the European spread at 2.63%. Two regions, nearly identical levels, both close to the cycle’s low.

Source: FRED

Source: FRED

Two layers, two choices

The allocation decision around High Yield plays out on two levels. At the top, whether the risk budget goes to equities or to credit: HY has traditionally correlated closely with equities, so choosing credit often means buying a diluted version of the same risk. Below that, within fixed income itself, which slice of that risk you want to carry. Rate view and duration on one side, credit risk on the other.

Buying government bonds now means buying duration without much compensation. High Yield asks for the opposite trade: credit risk, at a price that’s historically low.

That second choice is exactly what makes this month’s ranking legible. EMD is favored because it offers a return that’s missing elsewhere, Inflation Linked Bonds remain insurance against a scenario nobody rules out. High Yield bears the compensation problem hardest.

What the equity market is saying

The cross-asset signal comes from the equity market. As long as equities keep structurally climbing, demand for corporate risk stays high, and that compresses the compensation investors demand for carrying the same risk through credit. Steve Chiavarone, Deputy CIO Equities at Federated Hermes, winner of the Fixed Income Award at the Asset Allocation Awards, made exactly this case in this magazine in July: when spread on the riskier parts of fixed income isn’t sufficient, the risk budget moves into equities. What was a tactical call at Federated Hermes now shows up broadly in the High Yield ranking. Equities send, credit receives, and the message is simple: a cheaper alternative exists for this level of risk.

Government bonds play into this too. Northern Trust points out that bonds are losing their diversification benefit, they now move more closely with equities than they did in the decade after the financial crisis. Buying duration as protection therefore buys less protection than before. That makes the choice within fixed income harder than it was a year ago.

The case for and against

Bull case: 7 of the 58 managers with a view on High Yield are overweight, 12.1%. The argument is largely technical. Low duration and an attractive running yield, as ING Investment Office and T. Rowe Price both stress. MFS points to all-in yields above 7% in the U.S. Standard Chartered calls U.S. High Yield tactically bullish, UBP maintains selective exposure for extra carry.

In Europe, the picture has cautiously improved: Schroders saw technical conditions ease after a quiet summer for issuance, Allianz Global Investors and Wells Fargo both call the category resilient. A quality argument often missing from the debate: the share of BB-rated bonds in the global HY index rose from 39% in 2007 to 62% now, CCC fell from 15% to 7%. Today’s asset class carries structurally less risk than it did fifteen years ago.

Bear case: 21 of the 58, 36.2%, are underweight. Amova AM, Wellington, TD Asset Management and Fidelity all say spreads are too tight for further compression. BlackRock took a new step this quarter: a structural underweight in High Yield, favoring equities and private infrastructure equity instead.

Regionally, the picture is sharper still. Candriam is negative on U.S. High Yield, UniCredit runs an explicit underweight. DWS downgraded European High Yield over geopolitical risk tied to the Gulf conflict, HSBC holds a similar negative bias. Voya and MFS both say the extra compensation for the extra risk is simply too small to be worth it.

Source: Alpha Research

Yet the consensus sits uneasily next to the numbers. High Yield ranks last, but has been the best-performing fixed income category of the five this year: +0.77% in August, +1.88% year to date, the highest reading on both counts. Government bonds, the category meant to provide protection, lost the most: -1.82% YTD. Consensus looks forward to a compensation problem, performance looks back on a year in which that problem hasn’t yet shown up.

The hinge

Northern Trust is the most striking dissenting voice in this story: eleven-time laureate at the Asset Allocation Awards over eleven years, across the Asset Allocation, Regional Allocation and Overall categories. The panel data places the manager explicitly overweight High Yield as of August 2, while its broader bond book sits underweight at the same moment: Bonds overall, Corporate Bonds and Inflation Linked Bonds all at -1. That isn’t an inconsistency. It’s the exact split from this article’s opening, in practice: Northern Trust wants no duration, but does want credit risk.

Historically, the current positioning isn’t unusual. In 30 of the past 166 months, 18% of the time, High Yield has already been the least attractive fixed income category. CIOs have occasionally been more negative in number, but not structurally. So the question isn’t whether this is unprecedented. It’s what would need to change. The hinge is the fourth-quarter issuance calendar: if it stays slow, the technical support holds. If the refinancing wave arrives sooner than expected, compensation shifts faster than the ranking does.

The insurance policy that no longer pays out returns on its own once its price changes. Right now the reverse holds: government bonds offer less protection than before, and credit has to earn its own protection, at a compensation that simply isn’t there at this level. That High Yield happened to deliver the best return this year changes nothing: spreads price what’s still to come, not what already happened. Spreads will speak again once that changes. Until then, High Yield is mostly expensive: the same risk is cheaper to find elsewhere.

New to this? Credit spreads are the price investors demand for carrying credit risk on top of safe government bonds, and that price is now historically low for High Yield. For your portfolio, that means the same level of risk is currently cheaper to find in equities than in high-yield corporate bonds.

As September opens, two Awards panel reports set up a clean test of conviction against consensus. The Asset Allocation Consensus, built each month on sixty-nine institutional managers overseeing sixty-two trillion, five hundred and fifty-one billion euro in total, rates High Yield among its least favoured fixed income categories. Northern Trust Asset Management disagrees, holds a two percentage-point overweight, and grounds that call in a specific supply argument. Pictet Asset Management, meanwhile, retreats from Utilities.

House View: Northern Trust Asset Management

Northern Trust Asset Management, nominee for this year’s Asset Allocation Award and the most decorated firm in the Awards’ history with eleven wins in eleven years, holds a two percentage-point overweight in High Yield, four percent tactically against a two percent strategic weight, unchanged from its last reading. The conviction rests on a supply argument: after a nine-basis-point spread widening in July, primary issuance undershot expectations, and Ben McCubbin, Co-Head of High Yield, writes that “we expect issuance to remain slow this month, limiting net supply and potentially providing a short-term technical tailwind for the asset class.” The Consensus, by contrast, is markedly more cautious, a net underweight of twenty-four percent, ranking High Yield twenty-second of twenty-five categories.

Bond Yields: The Long and Short of It, September 2026↗

House View: Pictet Asset Management

Pictet Asset Management, nominee for the Sectors Award and an eleven-time finalist in that category, arguably the panel’s sector specialist, cuts Utilities from overweight to neutral this month. “The recent surge in bond yields and the possibility of rate hikes bode badly for utilities... We therefore downgrade utilities to neutral,” the house writes, arguing higher long-term yields erode the sector’s appeal as a bond proxy and dividend play. The move is a formal rating change, not a tactical trim, and it runs directly against the Consensus, which still ranks Utilities seventh of twenty-five categories with a net overweight of forty-three percent.

Barometer: Robust earnings growth to push equities higher, September 2026↗

What It Means for the Consensus

Two contrarian moves, opposite directions. Northern Trust holds a two-point overweight in High Yield, backed by a supply argument, where the Consensus is most negative, rank twenty-two of twenty-five. Pictet retreats from Utilities where the Consensus is most positive, rank seven of twenty-five. Neither is yet a signal.

No professional investor will say it out loud, but an AI bubble and a closed Strait of Hormuz are now pulling almost equal weight on the market. Yet that is exactly what this month’s numbers show. Measured by breadth and portfolio action among the 39 managers scanned for this report, the AI capex cycle and the Strait of Hormuz conflict score a mathematical tie. Only on the number of managers touched by the theme does AI capex narrowly beat Hormuz, making it this month’s lead theme.

Even so, the 69 reports read this cycle leave little doubt about how asset allocation is being positioned. Despite the tension between growth optimism and geopolitical risk, it remains decisively risk-on.

Asset allocation is the decision that makes the biggest difference to a portfolio’s eventual return, more than security selection or timing within a category. This report therefore sets out not only what the consensus among asset managers is, but why: through the eight macro themes driving positioning this month among the 39 managers scanned for the underlying research.

The signal

The table accompanying this article covers all 25 categories tracked by the AAC (Asset Allocation Consensus), the key moves follow below. Equities stand at 74.1% overweight versus 1.9% underweight. Of all 166 months since this survey began, only 27 were more optimistic. Cash shows the mirror image: 61.1% underweight versus 11.1% overweight, the gloomiest reading ever recorded for the category. Real estate and the broader bond category remain mildly unattractive, and commodities hold a moderate overweight, though less pronounced than last month.

Within regions, the preference for emerging markets is outright historic this time: 64.6% overweight versus 3.1% underweight, the highest reading ever recorded. America also remains firmly overweight, despite all the talk of an AI bubble, holding exactly the same tilt score as last month. Japan sits at 31.7% overweight, just over the line into overweight territory, a position resting mainly on the Japanese market’s sensitivity to oil imports and a structural AI tilt. Europe and Pacific ex Japan share the role of least-wanted region. Both tilt scores still fall just within the neutral zone, but they form the bottom of the ranking.

Within fixed income, emerging market debt is the standout, the strongest of the five categories at 52.7% overweight. Only 30 of the 166 months measured scored higher. High yield sits at the other end of the spectrum and, since government bonds moved to neutral this month, is now the only category still classified as underweight. For high yield, only 25 months were ever gloomier, a reading that puts the category close to a multi-year low.

Technology remains the most overweight sector: 78.6% overweight, and the only sector at 0% underweight. Industrials trails as the second-strongest sector, at 50.0% overweight, with a tilt score that has climbed steadily this year. Financials holds a stable overweight. Consumer staples is technology’s mirror image, structurally the least-wanted sector on the board. Utilities, healthcare and consumer discretionary are this month’s sectors in motion. More on that below.

AI capex: the lead theme, with a vocal minority against it

The AI capex cycle is not only the most broadly held theme this month, it is also the theme with the most direct portfolio action: 34 of the 35 managers who flag it also translate it into an actual position. Strong second-quarter results and repeatedly upgraded capex plans from the major hyperscalers are fueling confidence in what has become known as the ‘AI trade’. That translates into broad upgrades across technology, semiconductors and software, and into a structural preference for America, Japan and emerging markets. Precisely the regions sitting at the top of this month’s AAC figures.

At the same time, unease is building. Valuation and concentration risk are named by a substantial share of managers as the cycle’s biggest risk. There are concrete concerns about a correction in semiconductors and memory chips, and doubts about how quickly AI investment will pay for itself. A small but vocal minority goes further and holds a tactical underweight equity position, backed by negative free cash flow at one of the largest AI names and by a South Korean technology index trading 40% below its peak. The same minority warns that a wave of AI IPOs has historically been a late-cycle signal, not a sign of an early one.

That tension, a consensus sitting almost unanimously overweight against a small group doing the opposite, is what gives the theme its edge. Not the question of whether AI is driving the market, that much is settled. Rather, the question of how late it already is in that cycle.

The theme also reaches well beyond equities. Rising bond issuance by hyperscalers to fund those capex plans is compressing investment-grade spreads in that corner of the market, reinforcing the appeal of corporate bonds within an otherwise unattractive fixed income category. Real assets benefit too: energy, industrial metals and data-center infrastructure are explicitly cited as spillovers from the same capex wave, which helps explain why industrials has climbed steadily this year to the second-strongest sector position.

Hormuz: the risk that will not go away

The conflict between the United States and Iran flared up again in July, after a memorandum of understanding in late June brought only temporary relief. Transit through the Strait of Hormuz was disrupted once more, Brent climbed toward and above $100 a barrel, and the energy price shock fed renewed inflation fears and higher bond yields. Most managers now treat this as a recurring background risk rather than a one-off shock, and are responding to it concretely. Trimming equity and oil overweights. Higher demand for gold and the dollar as a hedge. Caution on government bonds and on European and Australian equities.

That explains much of why Europe and Pacific ex Japan, which includes Australia, are this month’s least-wanted regions in the AAC figures, while oil-poor, import-sensitive Japan benefits from any sign of de-escalation.

Not everyone shares the gloom. One party notes that the odds of the most disruptive scenarios have actually fallen, and that geopolitical risk is no longer the dominant market driver. A reading that stands out sharply against the broadly defensive tone of the rest of the field.

Central banks: hawkish, but the numbers say otherwise

Under new Fed chair Kevin Warsh, the market has flipped from expecting rate cuts to a hawkish ‘hold’, with heightened uncertainty as Warsh pulls back from explicit forward guidance. That pushed up the term premium and long-end yields: the 30-year US Treasury yield reached its highest level since 2007, the 10-year German Bund yield its highest since 2011. The ECB and the BOJ are also widely seen as tightening further, reinforcing caution on government bond duration and support for the dollar.

What stands out here: government bonds are actually moving from underweight to neutral this month, not further the other way. That is less contradictory than it looks. The category was already sitting so deep in the unwanted camp that even a hawkish repricing cannot push it lower. It is a sign of how low the bar already was, not of renewed enthusiasm for government paper. One manager goes against the grain entirely and holds a neutral, rather than defensive, duration position, arguing that the market is pricing in a rate hike as more likely than the manager itself believes.

Oil: the best-performing sector of the month, with a catch

The oil price rose sharply in July, from just above $70 to more than $100 a barrel at its peak, driven by renewed Iran tensions and disrupted transit through Hormuz. That made energy the best-performing sector of the month and pushed inflation and rate expectations higher still. At the same time, a substantial share of managers expect this price shock to be temporary, with a gradual normalization toward $75 to 90 a barrel later this year. Chinese strategic reserve drawdowns and alternative pipeline routes are cited as buffers.

ING Investment Office has already drawn a conclusion from this: lowering the weight of Europe, hit by both the oil price and a lack of its own growth drivers, while raising the weight of tech-sensitive Japan.

That expected normalization may also explain a figure that does not add up at first glance. Despite the month’s strongest sector performance, the Consensus Tilt on energy actually declined slightly, from a small plus to a small minus. If the price shock is expected to be temporary, there is no need to pull the sector weighting up with it. One party takes the relativizing view further still, noting that the feared second-round effects on core inflation have largely failed to materialize.

Four smaller themes that explain the rest of the board

Inflation remains stubbornly above central bank targets, driven mainly by the renewed rise in oil prices. That limits room for rate cuts and puts further pressure on the appeal of government bond duration. UBP breaks clearly from the consensus here: in the manager’s view, the peak in inflation is probably already behind us, with a gradual decline in the second half of the year if Middle East tensions ease on a sustained basis. Even UBP, though, does not see a return to the 2.0 to 2.5% target zone before spring 2027.

The dollar is fighting its own two-front battle.

In the near term, supported by safe-haven demand around Hormuz and by higher US rates. Over the medium term, a majority expects gradual weakening instead, driven by de-dollarization, with central banks rotating reserves away from the dollar and toward gold. That explains in part why emerging market debt is the strongest fixed income category this month: local-currency EM debt benefits from exactly that scenario, while hard-currency EM debt is approached more cautiously as long as the dollar stays strong in the near term.

China is widely seen as a two-track economy: weak consumption and an ongoing property crisis offset by strong exports in high-tech and green manufacturing. That export strength reduces the urgency for large-scale stimulus, so most managers stay neutral on China specifically while building the broader EM overweight mostly outside China. A nuance that makes this month’s record regional preference for emerging markets more precise than the headline figure alone suggests.

Trade tariffs remain the weakest of the eight themes, by far the least tied to direct portfolio action. In early August, the US government replaced its expiring universal tariffs with broader sectoral levies. Some see that as renewed escalation, others as a shock that is largely behind us. Few managers attach their own position to it.

What actually changes this month

Of the 25 categories the AAC tracks, only four change classification this time. Government bonds move from underweight to neutral, as described above. Within sectors, utilities steps from neutral to overweight, the month’s strongest improvement and the sector’s highest reading in nearly its entire measurement history. Healthcare moves the other way, from overweight to neutral, after its biggest decline of the year. Consumer discretionary slips from neutral to underweight.

None of the eight macro themes explicitly explains why utilities and consumer discretionary are moving now. That remains an open question for now, though for utilities a link to the power hunger of AI data centers seems plausible, given the same cycle already lifting industrials. Consumer discretionary keeps sliding while consumer staples, the structurally least-wanted sector, has actually improved slightly this year, which at minimum suggests that consumer caution is becoming more selective: not away from the consumer, but away from discretionary spending.

At the asset class level and the regional level, nothing changes. America, Europe, Japan and emerging markets hold exactly the same tilt score as last month. This cycle’s movement sits entirely in fixed income and sectors, not in the big strategic calls. That distinction is itself informative: the broad shape of asset allocation holds, the professional investor is currently adjusting at the edges, not the foundation.

What could turn this picture around? The Strait of Hormuz itself is the candidate most likely to move things fastest: an actual reopening could flip the oil price, inflation fears and the regional stance against Europe in a single move.

The margin between AI capex and Hormuz was razor-thin, and that is exactly what makes the takeaway for the professional investor razor-sharp: the scale still tips toward risk-on this month, just less convincingly than the equity positioning suggests. It is not whether that balance eventually tips that should occupy the market. It is when, and who moves first.

New to this?

Every month, 69 reports from professional asset managers are distilled into one clear signal about where money is flowing and why. This month that signal is extreme: confidence in equities and technology has never been higher, and confidence in cash never lower, and that is worth knowing before you look at your own portfolio.

For fifty years, the bond was the foundation under every portfolio. Shake the equity market, and the foundation absorbed the blow, full stop. But what if that foundation gives way itself? That’s the question creeping through Ray Dalio’s last five LinkedIn posts, though never quite in so many words.

Over the past few months he published pieces that seemed to have little in common: macro investing, AI, diversification, China, US debt. Five loose observations, you’d think. Lay them side by side and something else emerges: a strikingly consistent asset allocation argument.

What draws us in is the premise Dalio opens with, one that also sits at the core of our own research: “The most important decision you have to make is what asset allocation you have.” One thread through five pieces. And inevitably, the question that follows: what does that mean in practice, now that both equities and bonds carry structural risk?

In the piece from June 4, Dalio lays the groundwork, and his reasoning is compact. Macro forces drive the relative moves between asset classes, and those relative moves account for most of a portfolio’s return. Not stock picking. Not timing within an asset class. The allocation itself.

That’s why he argues for a global macro long-short approach: understand the macro drivers, and you understand which asset classes will win and lose against each other. Asset allocation, in his view, isn’t one of the decisions an investor makes. It’s the decision.

Nothing new in itself, Dalio is repeating something from his own philosophy he’s preached for decades. It gets interesting with the four pieces that follow.

The Problem Has Changed

In the two pieces from June 10 and June 15, Dalio brings principled thinking, AI and portfolio construction together. His concern: heavy concentration in AI-related stocks, high valuations, and real uncertainty about how the two relate.

Not trying to predict the winner, that’s his answer. Diversification across as many uncorrelated return streams as possible, the premise behind what he calls his “Holy Grail.” Strategic asset allocation is the base, tactical allocation he reserves for moments with sufficient conviction.

Then comes the number the rest of this article turns on. Dalio expects real equity returns of roughly minus 5 to minus 10 percent over the next five to ten years. No correction, no dip, a structurally poor decade for equities in real terms.

This is where our own data get interesting.

Our Numbers Next to His

Dalio is considerably more bearish than the institutional consensus. Our Expected Returns database collects Capital Market Assumptions from 45 to 69 reports per asset class, depending on the region, and shows what professional investors actually expect right now.

One caveat first, or you’re comparing apples to oranges: Dalio’s figure is real, adjusted for inflation. The consensus figures below are nominal. That difference accounts for most of the gap between the two views.

Even after that adjustment, a gap remains. At a typical inflation assumption of around 2.5 percent, consensus on US equities would land at a real return of roughly 3.5 to 4 percent, well above Dalio’s entire range.

And gold? The consensus isn’t exuberant there either: 5.80 percent, lower than Global Equities and Emerging Markets. Dalio still wants 10 to 15 percent of the portfolio in it. That’s not a return bet. It’s an insurance premium against currency debasement and debt monetization, one the consensus simply doesn’t price in.

Geography, Debt and Gold

The piece on the tribute system dynamic adds a geopolitical layer. The balance of power between the US and China is shifting, Taiwan is the pivot because it dominates global AI chip production, and that dependency makes AI concentration more fragile than a purely financial analysis suggests.

Geographic diversification, then, is no longer just about dampening volatility. It becomes protection against geopolitical regime change, as Dalio puts it.

Look at our regional Consensus, and tension appears. Professional asset allocators are overweight the US, overweight Emerging Markets, overweight Japan, neutral Europe and Pacific ex Japan. No broad flight from US equities, none at all.

That doesn’t make Dalio wrong. His argument is structural, five to ten years out. The Consensus is tactical, three to twelve months out. Both can hold at once.

The last and heaviest piece, from August 21, shifts the problem from equities to bonds. Government bonds are traditionally the diversifier once equity risk rises. Dalio’s point cuts deeper: what if the government debt itself becomes the source of systemic risk?

His mechanism is a chain. Budget deficits of roughly $2 trillion a year. Rising interest costs of around $1 trillion. Roughly $10 trillion in debt that needs refinancing, and not enough demand to absorb it on current terms. The result: higher rates, monetization, or both, and eventually currency debasement.

He’s not just gloomy, he has a fix ready too. His “3% 3-part solution” aims to bring the US deficit down from roughly 7 to 3 percent of GDP, through a mix of spending cuts, higher tax revenue and lower rates. Without that correction, he calls the current path unsustainable.

The timing stays pointedly uncertain, three years, give or take two. His positioning is not: underweight government debt, 10 to 15 percent gold, a small slice of Bitcoin, more geographic spread.

So what do the people who work with this every day actually think?

What Allocators Are Actually Doing

Our Asset Allocation Consensus follows Dalio here, partly. Bonds sit fourth, underweight, but one spot higher than last round, when Cash was still the less unpopular option. Cash has since dropped to last place, also underweight.

A shift that runs against the flight-to-safety instinct: if investors were truly worried about rate and bond risk, cash would rise instead. Precisely the opposite is happening.

Within fixed income the distinction sharpens. Government Bonds are underweight, just as Dalio argues, and are in fact the second-least favored category. But Emerging Market Debt is overweight, Inflation Linked Bonds and Corporate Bonds sit neutral. “Bonds” isn’t one block for the Consensus. It’s a collection of categories, each with its own risk profile.

Commodities, meanwhile, rank second of all asset classes, overweight, right behind Equities. Not a gold position, Commodities is broader, but the same intuition driving Dalio: real assets are getting more weight than a year ago.

The Consensus doesn’t follow Dalio blindly. Nor is it heading the same direction by accident. Selective, with more nuance within fixed income than his “underweight debt assets” line suggests.

Three questions, and they decide what you do with this.

Is Dalio right that diversification matters more now? Probably. Concentration in a handful of AI names, combined with high valuations, is a risk that’s stayed underappreciated in recent years. But real diversification is more than adding extra equity regions, it’s about return streams that are genuinely uncorrelated.

Are bonds losing their diversification function, as he claims? Here we’d be more nuanced. Painting all bonds with one brush goes too far, our own Consensus shows it: duration, credit risk, inflation sensitivity and currency make a huge difference within fixed income.

And 10 to 15 percent gold, does that make sense? A sizeable position, larger than most institutional portfolios hold. But the Consensus itself expects no high return on gold, we saw it already, 5.80 percent, less than equities. Dalio isn’t buying return here. He’s buying insurance. We keep Bitcoin deliberately small too, just like he does.

The classic question for an asset allocator used to be: how much equity risk can I diversify away with bonds? Dalio’s recent pieces suggest a different one: what actually diversifies a portfolio anymore, now that equity concentration, government debt, currency risk and geopolitics are growing more tightly linked?

The foundation that sat under every portfolio for fifty years isn’t collapsing. It’s subsiding. Dalio’s five posts aren’t a wrecking ball, more a soil survey: a signal of where to re-lay the foundation, not where to run. Whoever rebuilds now on numbers rather than conclusions will be standing steadier in five years than whoever waited for the cracks to show.

New to this? Ray Dalio’s LinkedIn series touches on a question bigger than his own portfolio: what still protects your money when equities, bonds and currencies are all under pressure at once? That’s exactly the question professional asset allocation tries to answer every month.

This interview took place as a live conversation on July 1, 2026. What follows is a written synthesis.

Steve Chiavarone doesn’t open a conversation about tactical asset allocation with the latest data print or the next rate meeting. He opens with a question most of the 72 asset managers in the Asset Allocation Consensus skip: what long-term regime are we actually in?

“We ask two longer-term questions before we ever analyze what’s happening in the market over a short period of time. The first one is: what secular regime are we in? And the second is: what is the right framework with which to think about this environment? Then we look at the specifics, and we ask: what’s different from the framework?”

Steve Chiavarone, Deputy CIO Equities, Federated Hermes

That ordering is not incidental. Where many asset managers start from the short-term signal and reason forward from there, Federated Hermes sets out the regime first and only then tests the present against it. It’s a framework, not a forecast, and that distinction explains much of why the firm was both nominated for the Asset Allocation Award and won the Fixed Income Award this year.

Secular bull, secular bear

The framework itself is simple to sketch, but its edges are sharp. Equity markets, in Chiavarone’s view, move up or sideways over long stretches, never structurally down: a diversified market doesn’t set lower lows over a ten-year horizon. A secular bear, then, isn’t necessarily a large decline but the inability to make new all-time highs. The 1999–2013 period is the textbook case: two 50% drawdowns, but the real pain was thirteen years of no return for anyone who had bought at the top.

“You’ll sit and you’ll be 5, 7, 10, 13, 20 years out and have made no money in the market if you had bought at the old peak. And that’s really where you create the skepticism that then allows you to build the case for bull.”

Steve Chiavarone, Federated Hermes

A secular bull, Chiavarone argues, needs two ingredients: upward pressure on earnings through technology, and upward pressure on multiples through demographics. The current bull, born in 2013, is fed by AI, cloud and robotics, a trend Federated Hermes flagged as early as 2015, and by millennials as the largest generation ever, who start investing later and therefore need higher returns. As long as that framework holds, the team buys dips rather than sells rallies. The standard equity overweight sits between 4 and 6%, and the team is comfortable in the upper half of that range.

The approach was tested during COVID. Federated Hermes asked itself two questions: does the pandemic accelerate the technological revolution, or disrupt it? And does it accelerate the millennial demographic trend? The answer to both was yes, cloud adoption and remote work took off, and the housing market and wealth accumulation of younger investors accelerated. On that basis, the team expected a decline of no more than 30 to 35%. It came in at exactly 34%, followed by the recovery to new all-time highs the team had anticipated.

One detail from that same period shows how hard it is to keep a framework like this uncontaminated: team members based in New York turned out to hold a noticeably gloomier view of the economy than colleagues elsewhere in the country. A reminder that even seasoned strategists aren’t immune to the bias local experience can introduce into macro decision-making.

One decision, told twice

The underweight in EM debt and high yield is not a credit call, Chiavarone stresses, it isn’t about default risk or a macro disaster scenario. It’s a spread argument: too little compensation for how far out the risk curve you have to go. And once you conclude that compensation isn’t there, the risk budget has to go somewhere else.

Federated Hermes chooses to put that budget into equities, not as a separate decision, but as the second half of the same underlying call.

“Whether it’s EM debt or high yield, you’re going quite a ways out the risk curve within fixed income and there’s just not as much spread available. So what we’ve chosen is: rather than go out to the riskiest parts of the fixed income spectrum, you’re better off going into equities.”

Steve Chiavarone, Federated Hermes

That is arguably the most distinctive substantive observation from the conversation: the underweight in emerging-market debt and the overweight in equities read as two separate lines in a report, but in the decision-making they are one and the same judgment about where risk gets paid best. One nuance: Federated Hermes carries structural overweights in EM bonds in specific funds within the multi-asset suite, which also limits how far the tactical underweight can go in practice.

On the rates side, a third element enters the picture. The committee recently shortened duration, implying an expectation of higher long rates and lower bond prices. The reasoning: the market overestimates the odds of further rate hikes. Chiavarone instead expects a twist steepener, short rates falling once the market realizes hikes aren’t coming, and long rates rising because the United States, in his view, is the next major investment hub.

“We think that short rates will actually come down as the market realizes that hikes are not forthcoming. Meanwhile, the center of the United States right now is the next hot emerging market, that’s where the data center activity is, that’s where the investment is happening. So long rates will go up. A healthy 10-year bond yield in the United States is closer to 5%.”

Steve Chiavarone, Federated Hermes

With that metaphor he places the US rates market in the same mental framework as the EM debt position: capital seeks out wherever growth and return meet, whether that’s an emerging market or the American data-center boom. A 10-year yield closer to 5%, alongside structural inflation of 2.5 to 3%, is in this reading not a risk but a confirmation of the scenario.

Twenty years of trust as a decision-making edge

Behind the substantive calls sits a decision-making structure that makes the framework operational: a three-tier committee system covering liquidity, fixed income and equities, topped by a Macro PRISM Committee that sets the official house view every six weeks, in step with the Fed cycle. In cases of persistent disagreement or acute situations, a team member can “ask for the ball”, claiming the decision on conviction. During COVID, it was Chiavarone who asked for the ball and convinced CIO Stephen Auth to go along with the bull case. In 2023 the roles were reversed exactly: recession fear was at that point close to 100% consensus among Bloomberg strategists, and it was Auth who asked Chiavarone to fall in line with the non-recession view. Chiavarone did, and it turned out to be the right call. For Chiavarone, that back-and-forth is the proof the system works: it isn’t seniority that claims the ball, but whoever holds the strongest conviction at that moment.

“Anyone who really feels as though they have high conviction, who asks for the ball, we have a tendency to go that way, because we’ve worked together for 20 years. We know each other’s tendencies. My bias has historically been towards inaction. The CIO’s bias is towards action. And so we know that about each other.”

Steve Chiavarone, Federated Hermes

That acknowledgment of a personal bias, and of a colleague’s complementary bias, is rare in institutional communication, and relevant precisely because of that. It makes the process more credible than the committee structure alone would: not the existence of committees, but the knowledge of each other’s tendencies determines how quickly and how well a team turns conviction into action.

What this means for the portfolio

For pension funds weighing Federated Hermes’s positions against their own consensus figures, the core message is that the three most notable deviations, the equity overweight, the underweight in EM debt and high yield, and the short-duration position with a twist-steepener view, are not three separate calls. They are the outcome of one shared scenario: no imminent rate hikes, no recession, a secular bull that remains intact, but insufficient compensation for credit risk in the riskier corners of the bond market. Whoever decouples one of the three positions from the other two, in Chiavarone’s view, misses the actual reasoning.

Federated Hermes was nominated for the Asset Allocation Award and won the Fixed Income Award at the 11th edition of the Asset Allocation Awards by Alpha Research.

Equities convince, the yen tests, the bond market decides.

Japanese government bonds are rarely the first thing a portfolio manager mentions when he’s excited about Japan. This week, after the first US yen-buying intervention since 1998, they were.

A Historic Intervention

Japan and the US Treasury intervened jointly in the currency market this week: the first US yen-buying intervention since 1998. The yen recovered from roughly ¥164 to ¥155 against the dollar, before giving back part of the gain. Reuters calls the recovery tentative and warns that intervention mainly limits the speed of the decline, not the underlying direction. A durable trend break, Reuters notes, would likely require a stronger BOJ response, lower US rate expectations, and/or lower oil prices. (Reuters)

A Consensus That Was Already There

Our latest Asset Allocation Consensus data show that professional investors were already overweight Japanese equities before the intervention: 31.7% overweight, 58.3% neutral, and 10.0% underweight, with a tilt of +0.217. At +0.217, Japan just clears our +0.20 threshold for an overweight recommendation. Our data’s formal recommendation is overweight, with more than three times as many managers overweight as underweight.

The intervention did not create this investment case. It tested it.

The arguments underlying the panel are consistent: rising earnings expectations, positive price momentum, corporate governance reform, better capital discipline, and a more shareholder-friendly corporate culture.

Russell Clark reaches a similar conclusion from a different angle. He now calls Japan a “more normal” country, with inflation instead of structural deflation, and argues that normalization is precisely what benefits equities. (Russell Clark)

The Yen Is Still the Test

Where the equity consensus is stable, the yen is not. Alyosha, who tracks the yen most closely, saw a technical basis for a rally even before the intervention, but expected it to come through monetary policy, not direct intervention. The intervention caught him off guard. Days later, he was already calling the yen a disappointment again. (Alyosha, Punch Lines; Alyosha, Evening Wrap)

Capital Flows Research makes a sharper point: Bessent talks, Tokyo intervenes, but the underlying policy mechanics haven’t changed. The yen carry trade therefore remains tied to global liquidity and risk positioning, including the AI trade. (Capital Flows Research)

Russell Clark is even more explicit: he is neutral on the yen. His position follows not from currency direction, but from what the rates market is doing.

Investors, in other words, can be bullish on Japan without being bullish on the yen.

The Bond Market as Counter-Signal

Our Expected Returns data show a notable move: the expected return on Japanese government bonds rose to 2.46% in yen, an increase of roughly 46 basis points and the largest positive revision in the dataset this cycle. Methodologically, higher yields mechanically improve long-term expected returns. That reflects future return potential, not necessarily near-term price performance.

The 10-year JGB yield stands at its highest level since 1996, and the 30-year yield broke above 4%. (Michael Green) Russell Clark draws a hard conclusion from this: bearish on Japanese government bonds, because the market is now pricing in inflation rather than deflation.

This is where the real cross-asset signal sits. Japan is the sender: Japanese life insurers, historically large buyers of foreign bonds, can pull capital back to a home market that finally yields again. The global bond market is the receiver. Japan holds roughly $1.1 trillion in US Treasuries. When that buying flow slows, a structural marginal buyer disappears from US, European, and UK long-duration markets.

Japan, No Longer Isolated

A higher Japanese yield curve therefore feeds through into US Treasuries, European government bonds, and UK gilts, via reduced Japanese demand for foreign duration. The intervention itself underscores that channel: Russell Clark estimates that Japan may have sold $50-100 billion in US Treasuries to support the yen. (Russell Clark)

Alyosha links the yen and long US Treasuries as a possible shared short-side problem. That remains a hypothesis, not a confirmed dual intervention objective: Alyosha does not claim this was the official design.

Position Implication

If Japan’s rate normalization continues, expect sustained pressure on JGB prices and a gradual pullback of Japanese capital from foreign duration. If the intervention holds without further BOJ action, the yen remains exposed to renewed carry trade pressure. The hinge point is the next BOJ meeting and the direction of US rate expectations.

The intervention bought time in the currency market, not a solution. That solution, as the opening already suggested, sits in the bond market: while the yen reacts, the rate rules. For the professional investor, that’s the real lesson of the week: Japanese equities convince, the yen tests, and the bond market decides.

New to this? The US joined Japan in buying yen this week, marking the first US yen-support intervention since 1998. The bigger story is playing out in Japanese government bonds, where rising yields could pull capital home and away from the US, European and UK bonds many global portfolios depend on.

Sixty-six recommendation changes this month, against 54 in July, and yet the consensus barely moves. 51.5% of the changes were positive, 48.5% negative, almost identical to last month’s split.

Our database counted 69 reports current enough to qualify this cycle, 53 of them brand new. Most of the movement isn't visible in the headline recommendations. It happens beneath the surface. Regional allocation stands out the most: from 14 changes in July to 25 this month, and that shift, as it turns out, runs in the same direction as the rest of this cycle.

That balance isn’t a product of calm. ince late February, the world's most important oil shipping route, the Strait of Hormuz, has been largely shut following the US-Israeli air war with Iran.. In early August both countries signed a memorandum to reopen the passage, after which Brent fell nearly 5% in a single day, having gained almost 24% in July.

US inflation eased to 3.5% in June, while the eurozone climbed to 2.9% in July, both still much closer to 3% than to central banks' 2% inflation target. Yet the consensus isn’t heading for shelter: equities and commodities keep their preference, while cash keeps losing ground. Risk-on remains the dominant positioning, even with the gateway for a fifth of the world’s oil trade still hanging ajar.

The four charts below show exactly where that consensus stands this month, each measured against its full history since 2012. White candle: the score rose in 2026. Black candle: it fell. The wick marks the highest and lowest score ever recorded for that category since 2012.

Asset Allocation

None of the headline categories change their consensus recommendation. Underneath, plenty shifts, especially in bonds and cash.

Bonds climb from fifth place to fourth. Within the category, recommendations move from Underweight and Neutral toward Overweight, pushing the consensus score materially up from -0.417 to -0.237. Bonds remain underweight, but the tone turns noticeably less negative.

Cash becomes the least attractive asset class, dropping to the 98.8th percentile of all observations since 2012, only 1 to 2% of the past fourteen years scored more negative.

Commodities remain the second-favorite asset class after equities. Overweight and Neutral both decline, Underweight increases, but the consensus stays positive. Of the 165 months measured, only about 30 scored higher, commodities remain historically very strongly valued.

Regional Allocation

Only one consensus recommendation changes here: Pacific ex Japan drops from Overweight to Neutral. The underlying movements are more interesting than that single change.

Emerging Markets remain the favorite equity region and keep their Overweight rating. Both Overweight and Underweight decline, while Neutral increases, strategists are drifting slightly toward the middle without abandoning their preference.

US equities move the opposite way: Underweight and Neutral shift toward Overweight, pushing the consensus score higher still. The gap with Emerging Markets narrows, but the ranking holds: Emerging Markets first, the United States second.

Both regions remain in the historical top tier: of roughly 165 months measured, only about 10 to 11 scored higher each time. Neither EM nor the US has often been priced this convincingly. Here too, caution isn’t winning out, risk appetite is, in line with the broader picture this month.

Fixed Income

Emerging Market Debt remains the favorite fixed income category. As with EM equities, both Overweight and Underweight decline in favor of Neutral. The recommendation doesn’t change, but conviction softens slightly. Historically, EM Debt remains by far the most strongly valued category within fixed income.

Government Bonds climb from fifth to fourth place: many Underweight recommendations move to Neutral, and part of the Overweight positions shift the same way. Government Bonds remain underweight, but are no longer the least attractive fixed income category.

That distinction now belongs to High Yield, which has slipped into the historically least attractive fixed income categories.

Sectors

Most of this cycle’s consensus changes happen here: three recommendations flip at once.

Financials makes the biggest jump. Almost every shift runs from Underweight to Overweight, giving the sector not only an Overweight rating but also a climb from sixth to third place in the ranking.

Utilities move the opposite way: nearly every shift runs from Overweight to Neutral, with a small portion heading to Underweight. Notably, the sector still ranks among the historically best-valued, this month’s downgrade stands in sharp contrast with the long-term picture.

Consumer Discretionary follows the same path from Overweight to Neutral, sliding close to the bottom of its own historical range.

Consumer Staples becomes the least attractive sector of the ten: Overweight and Neutral both decline, Underweight increases, and the sector drops from ninth to tenth place.

Not every move points the same way. While bonds and Financials gain conviction, Underweight calls also grow for commodities, and High Yield keeps losing ground. Part of the reports still holds a more defensive reading, even if that view is in the minority this time.

The clearest pivot to watch for the next cycle: whether Financials’ climb to Overweight holds, or whether the fragile shift toward Underweight in Utilities continues. On the macro side, the Hormuz memorandum is still fresh and fragile, a slide back into an actual closure would be the first real test for this month’s risk-on consensus.

Sixty-six recommendation changes would normally suggest uncertainty. This month they suggest the opposite. Beneath the individual revisions lies a remarkably stable message: professional investors continue to prefer taking risk over hiding in cash. The headlines changed. The conviction didn't.

New to this?

Despite a largely closed Strait of Hormuz, wild swings in the oil price, and inflation running closer to 3% than to 2%, professional investors are still choosing equities and commodities over cash this month, what’s known as “risk-on.” For private investors, that means the average professional still prefers owning risk assets rather than sitting on cash, despite a macro backdrop that would seem to justify the opposite.

Three of the thirteen finalists of the 2026 Asset Allocation Awards published their views in last week, and the debate isn’t about whether technology is carrying the market, but how much longer you should pay up for it. Candriam and Invesco are both reshuffling their sector positions, while LGIM weighs which force lasts longer: the artificial intelligence (AI) revolution or geopolitical disorder. In the background, the global debt counter keeps ticking.

Candriam
Candriam, nominated for the Fixed Income and Sectors Awards, takes profits off US technology: the sector moves from +1 to neutral after the strong rally since May. “This is a tactical change, not a structural call” (Candriam, Monthly Coffee Break Equities, July 2026), the strategic view on semiconductors stays positive. The equity overweight runs through Japan and emerging markets, not the US. That gap between tactics and conviction is what the earnings season will test.
Monthly Coffee Break Asset Allocation, July 2026↗ · Monthly Coffee Break Equities, July 2026↗

Invesco
Invesco, winner of the Sectors Award, publishes its annual debt review: the global debt-to-GDP ratio rose in 2025 to 239.5%, driven mainly by emerging economies. “We assume that more debt brings more risk” (Invesco, Uncommon truths: Global Debt Review 2026). The risk lies in private debt service ratios, climbing wherever rates rose, France leads. Not panic, but the quiet condition under every scenario.
Uncommon truths: Global Debt Review 2026, July 2026↗

L&G Investment Management
L&G Investment Management, nominated for the Equities Award, takes a clear side in the AI-versus-geopolitics debate: “we believe AI will prove the more powerful and longer-lasting force” (L&G, Midyear global outlook 2026). Bond markets feel this first: the AI issuance wave, compared to the 19th century railways boom, is reshaping investment-grade credit indices. AI-watchers should be watching credit too.
Midyear global outlook 2026: AI vs geopolitics, July 2026↗

What It Means for the Consensus
The Asset Allocation Consensus has Information Technology on top with 71% overweight. Candriam (down from +1) and Invesco (up from underweight) are converging on neutral from opposite directions, an early signal. Candriam’s long core-European duration also runs contrary to the underweight government-bond consensus; LGIM offers no explicit equity rating.

Editor’s Note
House Views tracks how the winners and nominees of the Asset Allocation Awards, organised by Alpha Research, think and position. Not to predict markets, but to understand how investment views evolve before the consensus catches up.

A technology allocation is a matryoshka doll. The investor thinks he is buying one doll, but whoever opens it finds a second one inside: America. And inside that, a third: the dollar.

Technology is the most loved sector among asset allocators. Of the five finalists for the Asset Allocation Award for Equity Sectors, four are overweight. The only one staying neutral is, of all houses, the winner. That deserves an explanation, but first the question that precedes it: what exactly is inside that doll?

One sector, two hidden positions

The answer is in the holdings. The top 10 of the MSCI World Technology index accounts for 66.53% of the weight; for the Nasdaq 100 it is 44.71%. More striking: the two lists differ by just two names. That is more remarkable than it seems, because the Nasdaq 100 is not formally a technology index. It selects the hundred largest non-financial companies listed on the Nasdaq exchange, regardless of sector; Amazon and Alphabet officially fall outside technology. That a global sector index and an American exchange index nearly converge at the top says everything about how dominant the concentration is.

The regional breakdown makes it explicit. MSCI World Technology invests 89.47% in the United States, against 63.63% for the broad MSCI World. Overweight the sector, and you automatically increase your America weight. And for the non-US investor there is a third layer: an unhedged dollar position.

Here the sector allocation sends a signal that the regional and currency allocation must receive. Three decisions that most investment processes take separately turn out, in practice, to be one and the same position. The sector table hides a regional bet and a currency bet.

The consensus and its arguments

The consensus tilt for Technology stands at 0.67, the highest of all sectors in our universe. That tilt is based on the 68 asset manager house views we read this month. Among the five Award finalists, the tilt is even higher at 0.8. The specialists, in other words, are more positive than the broad field. Both figures are our own tallies; the finalist group counts five houses, which makes the second figure a qualitative signal, not a statistic.

The bull case rests on earnings, not on hope. Pictet AM reports that 99% of IT companies in the S&P 500 beat earnings expectations. UBP sees the sector’s 2026 earnings growth expectations more than doubling, from 31% to roughly 70%, and concludes that earnings are growing faster than share prices. Candriam points out that the forward price-to-earnings ratio of semiconductors is still in line with its five-year average.

The bear case, strikingly, uses the same sources. UBP notes that the SOX index trades at 28 times forward earnings, against a ten-year average of 19. ING Investment Office warns that elevated expectations leave no room for disappointments. Candriam took tactical profits in emerging markets because momentum has become crowded as a style factor. Four houses see the same risks; they just do not let those risks determine their allocation.

The dissenter is the winner

Invesco does. The Award winner is the only finalist neutral on technology, and the reason is not a sector view but a framework. In their scoring model, valuation carries three times the weight of any other factor. The US market trades at a cyclically adjusted price-to-earnings ratio of 47, just below the March 2000 peak of 49. When the US began its outperformance in 2008, that same measure stood at 25.

Then there is the AI question. In Uncommon Truths, Invesco‘s strategist asks whether AI is actually delivering for its users: the evidence for the makers of the infrastructure is there, but the evidence of durable productivity and margin gains for users is missing. As long as it is, the model does not justify the premium.

That doubt hits the sector investor more directly than it appears. Look at the top 10 again: NVIDIA, Broadcom, Micron, AMD, ASML, Intel, Applied Materials, Lam Research, eight of the ten names form the AI infrastructure chain. Invest in AI through the sector, and you buy almost exclusively the supply side of the theme. The platforms that apply and monetise AI fall outside the sector definition, and the purest AI companies are not even listed yet. A technology allocation is therefore not an AI bet, but a bet on the picks and shovels, precisely the side where Invesco questions whether the profits will stick. Within their US portfolio, technology is in fact a favoured sector; the neutrality sits at index level, not in conviction.

The consistency runs deeper. Invesco expects dollar weakness, and whoever follows the arithmetic above sees why that matters: a tech overweight is a dollar position. The winner does not dissent because a strategist holds an opinion, but because three separate model outcomes point the same way. Process over signal.

The position implication

If earnings growth continues: the consensus wins, and the hidden US and dollar exposure is rewarded rather than punished. If the AI gains for users fail to materialise: the Invesco framework wins, and the sector correction hits three positions at once. The hinge is not chip demand, but the first hard evidence of productivity gains outside the technology sector itself.

And so the circle closes: buy technology and you buy America, and buy America and you buy dollars. The matryoshka stands reassembled on the shelf, three dolls that look like one position. The consensus weighs the outer doll and finds it attractive; the winner takes them apart and weighs all three. Read the sector table as one decision, and you undercount your positions. Buying three dolls means weighing three times.

New to this? Buying the technology sector sounds like one decision, but it quietly ships with two more: a bet on America and, for non-US investors, a bet on the dollar. Knowing that changes how much technology you actually own.

Three of the thirteen finalists in the 2026 Asset Allocation Awards published their July outlooks this week, during an unusually quiet stretch for markets. Federated Hermes, T. Rowe Price, and UBP share one conviction: earnings growth, not valuation, is driving equities. But the agreement breaks down the moment credit comes up.

UBP, double winner of the Asset Allocation Awards (Asset Allocation Award and Asset Allocation Award Overall), names the shift toward Europe and away from defence and China as one of five key changes this month: “We have exited defence and China, tilting instead towards Europe and emerging markets.” The formal regional rating for Europe, China, and EM stays at baseline, though, no dot, so no official rating change. What is table-confirmed: credit conviction (high yield/AT1, 3/5 to 4/5) and gold (5/5 to 4/5).

UBP House View, July 2026↗

T. Rowe Price, nominee for the Asset Allocation Awards (Equities, Overall), is underweight European equities ex-UK despite fiscal support and falling energy prices, this one does sit explicitly in the official rating table. In the US, the firm favours Growth over Value: “this is not a call to chase Growth indiscriminately.” Duration stays cautious under new, less forthcoming Fed Chair Warsh.

T. Rowe Price, Global Asset Allocation: The View From Europe, July 2026↗

Federated Hermes, winner of the Fixed Income Award, is the most risk-seeking of the three at 6% overweight equities: earnings outweigh geopolitical noise, as “overcoming ‘walls of worry’ often leads to healthier and higher equity returns.” Within its own core expertise, fixed income, the firm stays cautious: high yield sits underweight on tight spreads and slow Fed cuts.

Federated Hermes, Where We Stand, July 2026↗

What This Means for the Consensus
The panel splits on high yield: UBP raises conviction to 4/5, while Federated Hermes, the Fixed Income Award winner, stays underweight. That tracks the Consensus: officially Neutral, but clearly skewed toward underweight (35.7% versus 17.9% overweight). Specialist and Consensus point the same way.

Editor’s Note
House Views tracks how winners and finalists of the Asset Allocation Awards, organised by Alpha Research, think and position. Not to predict markets, but to understand how investment views evolve before the consensus catches up.

This week’s nominee updates span two horizons. J.P. Morgan Asset Management and Robeco, both nominees for the Asset Allocation Awards, published their regular tactical updates, calls on the coming quarter. Pictet Asset Management added its Secular Outlook 2026, the house’s annual view on the coming decade.

1. J.P. Morgan Asset Management
J.P. Morgan Asset Management, a nominee for the Asset Allocation Awards, stays pro-risk this quarter: overweight U.S., Japanese and emerging market equities, plus U.S. high yield. Notably, the house is more dovish than consensus on Fed and ECB policy, a view it expresses through European government bonds rather than through the rate call itself. For allocators, that is arguably the more important signal: a duration bet carried in the bond sleeve, not written into the equity overweight.

“We remain pro-risk, favoring U.S., Japanese, and emerging market equities”
Global Asset Allocation Views, 3Q 2026↗

High yield here means sub-investment-grade corporate bonds, the riskiest tier of the bond market.

2. Robeco
Robeco, a nominee for the Asset Allocation Award, argues that classic 60/40 diversification is faltering as equities and bonds have moved together more often since 2022. “Diversification is no longer a ‘free lunch’,” the house writes, pointing to the growing dominance of a handful of technology companies within global indices. If that dominance is the real driver, professional investors need a new source of ballast beyond bonds. Robeco’s own portfolio leans into the same concentrated trade rather than away from it, staying long U.S. and emerging market equities.

Multi-asset market outlook, July 2026↗

60/40 refers to the traditional split between equities and bonds meant to offset each other in downturns.

3. Pictet Asset Management
Pictet Asset Management, a nominee for the Sectors Award, brings its Secular Outlook 2026: Our 10-Year Investment Outlook, the house’s annual long-term view. Over the next decade, private equity stands out as the highest-forecast return category at 9.7% per year, ahead of euro zone real estate. For allocators building the next strategic asset allocation, that reframes the illiquidity premium as the highest-conviction return source on the page. Japan also stands out: both Japanese equities and Japanese government bonds see materially higher return forecasts, driven by the end of financial repression and an expected unwinding of the yen-funded carry trade.

“The Japanese yen, arguably, has even greater appreciation potential”

Secular Outlook 2026: Our 10-Year Investment Outlook, June 2026↗

The carry trade means borrowing in a low-yield currency, historically the yen, to fund investments in higher-yielding assets elsewhere.

What It Means for the Consensus
J.P. Morgan and Robeco both stay overweight U.S. and emerging market equities, a tactical, near-term signal. Pictet’s Secular Outlook sits on a different, ten-year horizon, not a like-for-like comparison.

J.P. Morgan and Pictet read the same market through two different lenses this week: one counts the coming quarter, the other counts the coming decade. On most assets those lenses simply disagree in silence. On U.S. equities, they collide in public, and that collision, not the overweight itself, is this week’s real signal.

Editor’s Note
House Views tracks how the winners and nominees of the Alpha Research Asset Allocation Awards think and position. Not to predict markets, but to understand how investment views evolve before the consensus catches up.

Bob Homan, Global Chief Investment Officer, says it without hesitation: “We are probably individually less smart than those people out there.”

Those people are the large Anglo-Saxon asset managers: BlackRock, Goldman, firms with thousands of analysts and billions in research budgets. It’s a striking opening line for someone whose team has won the Asset Allocation Award six times and collected eighteen nominations in eleven years. But it isn’t false modesty. It’s a philosophy of process.

ING Investment Office doesn’t distinguish itself through better forecasts. It distinguishes itself through a system that keeps bad forecasts from becoming fatal.

The architecture

The committee counts over twenty people, including colleagues from Belgium and Luxembourg. Everyone contributes input: sector analysts, risk, communications. But the decision is made by six. And the decision isn’t put to a vote. The chair hears every opinion and decides.

Simon Wiersma, strategist and member of the Investment Committee: “The consistency doesn’t come from being able to forecast, it comes from having a tight process. Combining multiple perspectives, staying independent of anyone or anything. Even our own economists are input, not leading. Minimizing bias through governance. And putting risk at the center.”

Half of the committee members were already there in 2009. That’s no coincidence. Team stability is part of the design.

But experience alone isn’t enough. The younger guard, late twenties to early thirties, brings something the system deliberately needs: exponential thinking. Homan: “Things can behave exponentially. The real old-timers, the less flexible ones, don’t want to believe that, but it’s true anyway.” He explicitly counts himself among them.

The team’s barbell structure, 50-plus experience alongside young staff with AI and coding skills, isn’t a staffing choice. It’s architecture.

The evidence cuts both ways

April 2025. The market is sitting at the most negative scenario from the outlook Wiersma wrote in late 2024. The committee concludes: it can’t get much more negative than this. They buy. The timing is accurate to the day.

Then the other side. The Iran war breaks out. The majority of the committee wants to overweight America, underweight Europe. Homan decides differently: the trend of Europe outperforming America will continue after the conflict, and the war will be short. Both assumptions turn out wrong. It doesn’t work out.

What stands out: Homan tells this without hesitation. No defensive language, no after-the-fact justification. That openness is exactly what makes the process philosophy credible. A system that protects you from your own mistakes is only trustworthy if you’re willing to name those mistakes.

Choosing the right playing field

Asked why ING doesn’t bet on quantitative investing or AI-driven allocation, Homan gives an answer that sticks: “If you’re going up against Rico Verhoeven, you’re better off challenging him to checkers or chess than to boxing. On that terrain, we lose to firms throwing far more money, people, and data at the problem. Do what you’re good at.”

That isn’t a weakness. It’s an architectural decision. ING does use AI, but as an information processor. Wiersma has his own daily agent that summarizes incoming research into a tactical allocation overview. It saves time. It doesn’t make decisions.

The line is drawn deliberately. Top-down asset allocation, the over- and underweighting of equities versus bonds, remains human work. For now.

Where they stand now

The current positioning illustrates the philosophy. At the top level, ING is neutral on equities, real estate, commodities, and bonds. After the rally in early 2026, positions were actively rebalanced. Stretched expectations and the risk of persistently high inflation don’t justify big bets.

But neutral at the top level masks an active position underneath: ING is overweight Emerging Markets, through exposure to South Korea and Taiwan. Technology and semiconductors, the AI chain via the EM index. Two triggers actively guard that position: a stronger dollar putting pressure on EM, and a shift in AI sentiment where earnings growth slowing, even from 40% to 39.5%, could be enough to tip the balance.

Wiersma puts it this way: “Make sure you don’t box yourself in. If the market moves against you, you need to always still have the option to add.”

That’s the core of it. Not being the smartest. Not taking the biggest bets. Building a system that protects you from yourself, and letting it work year after year. Homan said it at the start of the conversation. Eleven years of Awards later, it turns out not to be modesty. It’s the strategy.

June 30th closed not only the second quarter but the first half of the year, three of the panel’s thirteen nominees for the Asset Allocation Awards open the third quarter with their first reports of the new period. US equities are their shared starting point: all three sit neutral. On where the capital should go, the paths diverge sharply.

House View: Pictet Asset Management

Pictet Asset Management (nominated for the Sectors Award) is the only one of the three to flip the switch explicitly: ‘we downgrade US equities to neutral,’ the Barometer writes, arguing the AI trade is broadening beyond US tech companies into other regions. Overall equities stay overweight nonetheless.

Barometer: Equity rally to roll on as stagflation risks recede, July 2026 ↗

House View: Amundi

Amundi (nominated for the Fixed Income Award) doesn’t change its official rating, US equities stay neutral, but its multi-asset desk does trim practical exposure: ‘we have reduced concentration risk by lowering our exposure to US equities and diversifying into Europe and the equally-weighted S&P 500.’ Europe gets an explicit upgrade in the asset-class table this time.

Global Investment Views, July 2026 ↗

House View: UBS Asset Management

UBS Asset Management (nominated for the Fixed Income Award and the Overall Award) is also neutral on the US, but picks a different destination than the other two: ‘we prefer emerging markets and Japan vs. Europe and Switzerland,’ with Europe explicitly underweight on weaker earnings growth. Where Amundi rotates into Europe, UBS avoids it.

Macro Quarterly Q3 2026 ↗

What It Means for the Consensus

Only Pictet confirms an actual change; Amundi and UBS are already at neutral. More importantly: the broader Asset Allocation Consensus still rates US equities overweight. With three panel members now at neutral, one having just turned, this is an early crack, not a tip.

Editor’s Note

House Views tracks how the winners and nominees of the Asset Allocation Awards, organised by Alpha Research, think and position. Not to predict markets, but to understand how investment views evolve before the consensus catches up.

On paper they agree completely, it’s only beneath the rating, in how each actually fills in that ‘neutral’, that the real difference shows.

The Asset Allocation Awards 2026 have been announced: 25 nomination slots, 13 asset managers, 5 winners across five categories. Every report below is one click away.

The same set of reports underpins the TAA Consensus of 1 July. That makes this edition not just an honour roll, but the reason to line up this year’s reports side by side.

UBP wins two of the five categories, Asset Allocation and Overall, and is also nominated in Equities and Sector: four of the 25 slots go to a single house. ING Investment Office wins Equities and is nominated in Sector and Overall. Together, these two firms take seven of the 25 slots. That points to a centralised research process driving multiple asset classes at once, compared with houses that compete in a single category on the strength of one strong quarterly edition. This count is our own tally across the five categories, not source data.

Asset Allocation
Winner: UBP — UBP House View
Nominees: Federated Hermes, J.P. Morgan AM, Robeco, Northern Trust AM

Fixed Income
Winner: Federated Hermes — Where We Stand
Nominees: UBS, Candriam, Invesco, Amundi

Equities
Winner: ING Investment Office — Maandbericht Beleggen
Nominees: T. Rowe Price, J.P. Morgan AM, UBP, L&G IM

Sector
Winner: Invesco — Is AI Delivering
Nominees: UBP, ING Investment Office, Pictet AM, Candriam

Overall
Winner: UBP — UBP House View
Nominees: ING Investment Office, UBS, T. Rowe Price, J.P. Morgan AM

Twenty-five reports, thirteen houses, five winners: the list above is not a summary but a roadmap. Every link takes you straight to the source, not to our interpretation of it. Read the reports themselves, and you can see immediately which house runs broad research and which house is competing on the strength of one strong edition.

That tension is not abstract for me right now. I started a search for a client this week: finding the right high yield fund, active or passive. The first thing I did was not look at funds, it was look at what the market itself thinks of the asset class. What follows is that answer.

US high yield spreads stand at 278 basis points, tighter than on the day the Strait of Hormuz closed. That is the paradox 68 sources could not resolve this month.

The Asset Allocation Consensus (AAC) distils the positioning of 68 professional sources worldwide into a single directional signal each month. For high yield, the outcome is neutral: 17.9% overweight, 46.4% neutral, 35.7% underweight. That split is not indecision, it is a market facing two equally weighted arguments with nowhere to go.

The income case is straightforward. All-in yields of 7.02%, with BB-rated paper at 5.97% and single-B at 7.28%, offer return potential that has been largely unavailable for most of the past decade. Default rates sit at 1.28%, below the historical average of 1.42%. Duration of 3.0 years versus 6.8 years for investment grade credit makes high yield structurally less exposed to further rate increases. In the current environment, where income is the primary return driver rather than spread compression, the buy-and-hold case holds.

The counterargument is equally strong, and it is about price, not quality. US spreads of 278 basis points sit 79 basis points below the five-year average of 357 basis points. For context: at the start of March, those same spreads stood at 303 basis points. Since then, markets have priced more risk into the economy and less risk into high yield. That divergence is what keeps SEB and Schroders underweight: the asymmetry versus equities is negative, and the risk-return profile is insufficient given the combination of growth risk, higher input costs, and tightening refinancing conditions.

Federated Hermes: spreads do not compensate for the risk

Federated Hermes, winner of the Fixed Income Award at the Asset Allocation Awards, is underweight high yield. The reasoning is consistent and unchanged since March: spreads are tighter than pre-conflict levels, the Federal Reserve is on hold, stress in leveraged finance, particularly private credit, continues to build, and redemption pressure adds a structural drag. The position has not moved in four months. That matters: this is not a reactive call but a considered view on risk compensation.

UBP: adding high yield is a bet we are not prepared to make

Union Bancaire Privée (UBP), winner of the Overall Award, arrives at the same conclusion from a different angle. In March, UBP reduced its exposure to high yield as part of a broader fixed income derisking, shortening duration from 4.5 to 3.5 years. The June House View maintains that stance: duration neutral at 4.0 years across USD, EUR, and GBP portfolios. The near-term distribution is binary. A signed agreement on the Strait of Hormuz pulls oil and yields lower and drives a risk-on move. A breakdown keeps the inflation backdrop intact and central banks under pressure to hike. Adding high yield at 278 basis points of spread is a bet on the first scenario. A bet UBP is not prepared to make.

What to watch

A reopening of the Strait of Hormuz is the primary circuit breaker. Lower oil prices, falling yields, and improved sentiment could shift the neutral consensus toward overweight. In the other direction, a further deterioration in private credit stress, or a rise in default rates toward the historical average, validates the underweight camp.

New to this? High yield bonds pay more than government bonds because they carry more risk, and that extra income is now higher than it has been in years. The question dividing professional investors: is 7% return enough when the safety margin built into prices is at a five-year low?

Two managers, one message: the rally is real, but most of the good news is already in the price. The question is not whether AI is driving markets, it clearly is, but whether the cost of building the infrastructure behind it is being priced into rates and inflation expectations.

House View #1 — ING Investment Office

ING Investment Office, winner of the Equities Award, maintains a neutral weighting in both equities and bonds. Strong first-quarter earnings, average profit growth of nearly 28% for companies in the S&P 500 index, have driven record highs, but the manager warns that “we think most of the good news is already reflected in prices”. Within equities, ING maintains its overweight in information technology (IT) and emerging markets. Within bonds, the preference remains for high yield and emerging market bonds over government bonds. No changes from last month, a deliberate neutrality at record highs.

Maandbericht beleggen, juli 2026↗

House View #2 — Northern Trust Asset Management

Northern Trust Asset Management, nominee for the Asset Allocation Award, asks a question policymakers are avoiding: is AI inflationary in the near term? The Investment Perspective of 26 June 2026 argues that the AI infrastructure investment wave, estimated at over eight hundred billion dollars in 2026, is colliding with constrained supply in chips, energy and construction materials. “AI may still be deflationary in the end. But first it must work through the inflationary cost of building itself.” Northern Trust maintains a tactical overweight in global listed infrastructure and an underweight in inflation-linked bonds. The positioning reflects three scenarios: a fiscal and productivity boost (30% probability), a two-speed expansion (40% probability) and a scenario in which economic fault lines broaden (30% probability).

Investment Perspective — Is AI Inflationary or Deflationary?, 26 June 2026↗

What It Means for the Consensus

Two managers, the same conclusion: the good news is priced in. If other panel members also hold or reduce their equity positions, that would be an early signal that the consensus is turning more defensive for the second half of the year. Northern Trust’s AI inflation question adds a dimension the consensus has not yet absorbed.

Editor’s Note

The AI boom is visible in earnings, but the bill for the infrastructure that makes it possible has not yet been fully presented.

House Views tracks how the winners and nominees of the Asset Allocation Awards, organised by Alpha Research, think and position. Not to predict markets, but to understand how investment views evolve before the consensus catches up.

It was March 2011. One day. That’s how much time my team had to decide whether to increase our allocation to Japan.

The earthquake had hit. The tsunami followed. Fukushima was unfolding in real time on every screen in the office. And somewhere in that chaos, a portfolio decision was waiting for an answer: do we buy the dip, or do we step back?

We made a call. I won’t tell you what it was, that’s not the point of this story. The point is what happened after.

For weeks afterward, I kept asking myself the same question: was it the right one? Not “did it work out”, markets can reward bad decisions and punish good ones, that’s just how distributions behave. The question that stayed with me was different: did we actually know why we made that call, or did we just feel confident about it?

That distinction, between knowing your reasoning and merely feeling conviction, turned out to be the most important thing I learned in this industry. And it’s the reason this publication exists.

The chain nobody shows you

Every allocation decision, mine included, is built on a chain of assumptions. An inflation assumption. A growth assumption. A correlation assumption that may or may not hold under stress. Somewhere at the end of that chain sits a label: Overweight, Neutral, Underweight, the industry’s shorthand for buy more, hold steady, or sell down.

What most investors see is the label. What they almost never see is the chain.

That’s true even, especially, when the decision comes from a major institution. A bank with hundreds of analysts publishes a house view on European equities. The view itself is visible. The reasoning behind it, the assumptions it rests on, the dissent inside the building before that view was finalized, that part stays in the building.

Multiply that by every asset manager, every bank, every research house publishing a monthly view, and you get a strange situation: the institutions managing $50+ trillion are, collectively, the best-informed body of opinion on asset allocation that exists. And almost none of that reasoning is visible to anyone outside their own walls.

I didn’t set out to fix that. I started doing it for myself, because after Japan I no longer trusted conviction on its own, mine or anyone else’s. I wanted to know what the rest of the field was actually thinking, and why. So I started reading.

What reading 60+ reports a month actually tells you

It started as a handful of reports. It’s now more than 60, every month, from banks, asset managers, and research houses, across 25+ asset classes. Not to find the “best” view. To find where the field agrees, where it quietly disagrees, and where everyone is repeating the same assumption without anyone having stress-tested it recently.

That last category is the one that matters most, and it’s the one no single report can ever show you. A single bank can tell you what it thinks. Only reading across dozens of them, side by side, every month, shows you what the field is doing as a whole, and where that collective position has become more crowded, or more fragile, than any one house view would reveal.

This is asset allocation, not stock-picking , and that distinction matters more than most investors realize. Research consistently shows that more than 80% of a portfolio’s long-term return is explained by the allocation decision itself, not by which individual names sit inside it. Get the chain of assumptions behind that allocation wrong, and no amount of skill in picking names within it fully makes up for it.

The consensus is a starting point, not a verdict

I want to be precise about what this is, because it’s easy to misread. The consensus I extract every month is not a signal to follow blindly. It’s not “the market is right, do what it does.”

It’s a baseline. A reference point built from the most informed, best-resourced opinion available, against which you can measure your own view. Sometimes you’ll read it and find you agree, and that agreement is worth something: you’re not running with the herd by accident, you’re running with it because the reasoning holds up under scrutiny. Sometimes you’ll disagree, and that’s valuable too, because now you know precisely where, and why, your view diverges from the field’s. And sometimes, reading it will reveal that a position you thought was your own conviction was actually just everyone else’s crowded trade, dressed up as independent thinking.

Running with the consensus, deliberately diverging from it, or unknowingly caught inside it, those are three very different positions to be in. Most investors don’t know which one they’re in, because they never see the consensus clearly enough to compare themselves against it.

What this looks like, in practice

That’s the work this publication does, every month:

• A structured Monthly Consensus across 25+ asset classes, not just the Overweight/Neutral/Underweight calls, but the reasoning chains behind them

• Quarterly Expected Returns, tracking long-term capital market assumptions as they shift

• AI & Allocation Signals, verified cases where AI is genuinely influencing institutional capital allocation, separated from the noise

• Award-Winner Interviews with allocators who’ve actually delivered, not just theorized

I read so you don’t have to. Not because the reports are inaccessible, many of them are public, but because nobody has the time to read sixty of them every month, extract what’s shared and what’s disputed, and turn that into something you can actually use to check your own thinking against.

Why I’m telling you this

I’m not asking you to trust my conviction. After Japan, I stopped trusting conviction as a standalone signal, including my own. What I’m offering instead is the chain: the reasoning, made visible, month after month, across the full field rather than any single house.

What you do with that is yours to decide. Run with it. Diverge from it, deliberately. Or use it to find out, for the first time, which one you’ve actually been doing all along.

If that’s a question worth answering for your own portfolio, the monthly version of this, the full chain, not just the label, is free to read. Every month, no exceptions.

Reading across one winner and two nominees of the Asset Allocation Awards this week, one pattern stands out: nobody doubts artificial intelligence (AI) as a growth engine, but on the implications for duration, a bond portfolio’s sensitivity to interest rates, and inflation risk, opinions diverge sharply. The question is not whether AI is driving markets, it clearly is, but what that means for the bond portfolio.

House View #1 — Invesco

Invesco, winner of the Sectors Award, asks an uncomfortable question: are users benefiting from AI yet, or only the chipmakers and hyperscalers? According to the manager, it remains “difficult to sort the AI wheat from the cyclical chaff”. Yet Invesco raises its equity allocation to 53%, at the expense of government bonds, a clear shift since March, when the US position was raised most.

Uncommon truths: Is AI delivering?, June 2026↗

House View #2 — T. Rowe Price

T. Rowe Price, nominee for the Equities Award and the Overall Award, sees the rates story differently. While markets price in rate cuts, the manager warns that “several structural forces suggest that the floor for interest rates could remain higher than it was over the previous decade”. The underweight in European and US government bonds, against an overweight in high yield, contradicts a soft landing.

Global Asset Allocation: The View From Europe, June 2026↗

House View #3 — Candriam

Candriam, nominee for the Fixed Income Award and the Sectors Award, shares the concern about AI-driven inflation, but draws a different conclusion than T. Rowe Price. The manager calls inflation “the banana skin capable of turning an otherwise constructive environment into a more challenging one” and chooses a long duration in German government bonds, the opposite of the short-duration positioning elsewhere in this edition.

Insatiable, June 2026↗

What It Means for the Consensus

Invesco and T. Rowe Price are independently moving toward lower government bond allocations, an early signal that part of the consensus is pricing in structurally higher rates. Candriam holds the opposite position with long-duration German government bonds, showing this signal has not yet become broad consensus.

Editor’s Note

House Views tracks how the winners and nominees of the Asset Allocation Awards — organised by Alpha Research, think and position. Not to predict markets, but to understand how investment views evolve before the consensus catches up.