While Europe is still struggling, the region is showing signs of improvement. For example, European retail sales grew by 1.4% last month, the fastest monthly gains since 2001. Though Europe will doubtless grow much slower than the United States in 2014, from an investment perspective it is often the marginal change that counts.
3. Stay underweight Treasuries, particularly short to medium exposures. While I remain cautious on Treasuries, much of yield rise I expect has already occurred. To the extent inflation remains low and the labor market recovery stays uneven, long-dated Treasuries may be less vulnerable than those in the short and middle parts of the yield curve (meaning Treasuries with maturities roughly between 2 and 5 years).
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist. He is a regular contributor to The Blog and you can find more of his posts here.
Sources: Bloomberg, BlackRock research