JPMorgan Weekly Asset Allocation View 04/26/10

• Asset allocation –– Stay long risky assets, but switch further from credit (high-grade) to equities.
  
• Economics –– Upside risks to growth in the US and Japan.
  
• Fixed Income –– Greece formally asks for EU/IMF support, but it remains too early to buy Euro high-yielders. Stay short Treasuries against Bunds. Turn neutral on Russia.
  
• Equities –– Strong earnings reinforce the case for staying long equities. We see upside risks to our year-end S&P500 target of 1300.
  
• Credit –– Tactically underweight US HG as heavy positioning and high valuations are leaving it vulnerable to the increase in global risks.
  
• FX –– We lower our USD/EUR forecast to 1.30 for June.
  
• Commodities –– We stay medium-term bullish crude oil