The sizes and sources of second waves of COVID-19 are likely to be key factors in determining how much ground, if any, equities cede to government bonds in coming months. While our forecasts allow for new small, localised outbreaks in advanced economies, they do not incorporate an assumption that there will be a large, nationwide, or global, one. Accordingly, we anticipate that equities will recover swiftly from any related setbacks and outperform government bonds against a backdrop of continued policy support.
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