Scottish Referendum

The outlook remains positive. A limited relief rally is ongoing but this has been moderated by still unresolved political issues. The UK markets' focus will move to the next event, which is likely to be next year's general election. Further negotiations about the devolution of powers to Scotland have to be monitored closely, since there are differing degrees of willingness among the three major parties to grant increased devolution.

- UK equities underperformed global equities since August, reflecting concerns about a potential "Yes" vote. But these underperformers are now doing well across the board, averaging returns of 3-4%.
- The market remains positive on UK and European equities and do not expect any further direct impact from the referendum's outcome on European assets. The relief rally has be limited as the possibility of a "Yes" vote was not aggressively priced in prior to the referendum.

Fixed Income:
- Gilts have re-priced along with the ongoing relief rally.
- Expect a flatter yield curve at the long end and BoE to gradually hike rates starting Spring 2015.

- Neutral on GBP vs USD, EUR vs GBP.