Is it time to move to cash?

Sadiq Adatia is looking at moving more assets into cash.

The chief investment officer for Sun Life Global Investments notes it’s unusual to see equities reaching record highs amid record low bond yields, indicating both may be in line for shifts.

“The markets have now almost forgotten about Brexit,” he says. “As some negative news comes through in the coming months, the markets will take a bigger hit because of how much they’ve moved. On top of that, I think you’re going to start seeing those yields move back up again, as confidence builds.”

He’s in the thick of uncertainty, the mot du jour for the BoC on Wednesday. The Bank cited a “climate of heightened uncertainty” as it held its benchmark lending rate at 0.5% and revised down domestic growth forecasts on the Alberta wildfires, trade flows and uneven consumer spending.

Read: Bank holds rate, says Brexit will trim Canadian growth

“In the wake of Brexit, global markets have materially re-priced a number of asset classes. Financial conditions, already accommodative, have become even more so,” the BoC said, suggesting additional uncertainties related to the U.S. political cycle, global growth and the European Union.

Adatia doesn’t expect significant impacts from Brexit in the short-term, and there remain additional European risks. Italy, for instance, confronts a possible bank rescue and a constitutional referendum in the fall.

“China is still slowing down, the U.S. still has its election coming through, and we have no clarity on Brexit yet,” he says. “The tariffs, and additional things that might happen down the road [from Brexit], are still years away from being implemented.”

The Bank projected Brexit will knock 0.2 percentage points off global GDP by the end of 2018.

“It is early days, and there will be a prolonged period of uncertainty as authorities work out how the U.K. will exit from the European Union,” Carolyn Wilkins, BoC deputy governor, said in Ottawa. “We are assuming that the Brexit process will proceed in an orderly fashion.”

Read: Tax-efficient investing in a low-rate environment

Heading into the U.K. referendum, Adatia says his firm was moving more assets into cash, but bought some Canadian bonds in the event of a negative outcome.

“But now we think the yield has gotten way too low,” he says, so the firm may temporarily move to more cash.

Most analysts see the BoC on hold for a year or longer. Macquarie Research this week forecast that the central bank wouldn’t hike before Q2 2019, extending that from an earlier prediction of Q2 2018.

As a result, Walter Posiewko, a senior portfolio manager for RBC Asset Management, is getting away from cash and looking to attract yield amid the apparent stability of low interest rates.

“[It’s to] start moving out the yield curve, or the credit curve, and I think that’s what we’ve been doing. Being in cash just doesn’t pay in this environment,” Posiewko says.

“Uncertainty in Brexit, uncertainty in China […] [there are] a whole bunch of reasons to expect that central banks are going to continue being super stimulative and accommodative,” he says.

Read: Where to park clients’ cash