Politics dictates policy

In this context, the sell-off in Italian government bonds and in equities can be viewed as traditional risk-off investor behaviour, given both would be highly exposed to a dramatic loss of market confidence.

In the US, government bonds and the dollar are global reserve assets, so were relatively less affected by the market rout in late 2018.

Instead, trade and policy risk was more immediately priced into the highly liquid equity market. This reflected not only end-cycle fears, but also the fact that the market contains many companies exposed to US-China trade relations.

We have generally avoided directional sterling exposure, removed Italian bonds and been tactical with US equities.

As we said earlier, economic policy can never be completely divorced from politics.

Stephanie Kelly is senior political economist at Aberdeen Standard Investments