by Joseph Y. Calhoun
The risk budget is unchanged this month although the composition of the portfolio does change. For the moderate risk investor, the allocation between bonds, risk assets and cash remains at 50/45/5. There are changes to the allocation but the overall risk budget stays the same. Credit spreads did continue to narrow this month but other indicators did not confirm the move. The yield curve flattened and valuations rose as earnings fell. Momentum for major stock averages is waning short term and the US dollar has weakened since the last update.