As Treasury yields climb and assets geared to the recovery race ahead, the Asset Allocation Committee asks, will the economy overheat, and should investors consider rebalancing?

The first quarter of 2021 brought what the Asset Allocation Committee expected, and as it looks to the next six to 12 months, it faces two questions. Do we think the economy will overheat, pushing bond yields to levels that unsettle equity markets or even force central banks to stifle the recovery? And have markets moved enough to justify some rebalancing of last quarter’s views?