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Investors should moderate their overweight in equities and their underweight in fixed income, suggests a new report released Thursday by London, Ont.-based GLC Asset Management Group.

“Today, investor, business and consumer optimism is high. Yet as a natural progression, the further along the economy rolls the harder it becomes for conditions to improve, says Brent Joyce, GLC’s chief investment strategist, in a statement.

“Eventually a normal slowing of the economy is healthy and to be expected,” Joyce says.

Although the report lays out a series of late cycle economic signs that highlight a greater degree of uncertainty for global capital markets, GLC’s base case is that the economy has enough momentum, and that inflation and financial conditions will remain accommodative long enough, that they continue to favour equities over fixed income:

“At the current pace, we see supportive conditions lasting long enough that we believe it is too soon to move to a neutral stance, but caution is warranted, and we need to be nimble in our investment positioning,” says Joyce.

The report offers the latest economic insights and market forecasts, including regional forecasts for Canadian, U.S. and international equities, as well as sector forecasts for Government, investment grade corporate and high-yield corporate bonds within the Canadian fixed income marketplace.

Read the full report.