Searching for bright spots in a trickier phase
Recent inflation and growth data from the US indicates continued strength in the economy, leading us and various institutions including the IMF to revise up US growth. We see the current strong momentum to continue into Q2 but expect a deceleration in H2, without negative growth in any quarter. Data on the inflation side also points to stickier prices, with upside risks from the recent geopolitical escalation (oil)...
Vincent Mortier
As uncertainty on Fed policy and inflation fronts persists, we think bright spots can be found in attractively-priced equities, and investment grade credit. EM bonds are attractive from a medium term perspective.
Recalibrate amid an evolving global economy
Recalibrate amid an evolving global economy
As the year progresses, we are getting more clarity on how economic growth and inflation are behaving in the developed world. Growth is resilient and inflation stalling but not resurging. Central banks are still expected to move towards cutting rates, albeit more cautiously. Amid better-than-expected growth in developed markets, we keep a slightly positive risk stance, with a preference for equities over credit.
Bonds remain attractive on a medium-term horizon
The latest US inflation readings have led the markets to assess the relevance of ‘higher for longer rates’ narrative as the Fed shows signs of delaying rate cuts. This more nuanced picture, has made US policy actions difficult. Consequently, this is a time to be very active on duration, and monitor inflation carefully. Bond yields are still attractive from a medium to long term perspective.
Bonds remain attractive on a medium-term horizon
Search for relative value in Europe and Emerging Markets
Search for relative value in Europe and Emerging Markets
The rally this year has been led by optimism around tech and US large caps, and resilient growth so far. But stocks may see a breather now as the rally broadens towards other regions and segments. However, earnings strength should be the key driver of future returns as valuations are full in select corners of the market.
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