Economics
- Trump is increasing pressure on the European Union in the trade dispute. However, a trade agreement in the summer seems likely.
- The economy in the UK is stable. Inflationary pressure is preventing further interest rate cuts by the Bank of England.
- The US economy remains robust for now. However, growth is expected to lose significant momentum in the coming months.
Equities
- Global equities with significant recovery in May.
- US reporting season surprised positively, but earnings expectations were reduced further. Narrowing of the valuation gap between US and European equities.
- Share buybacks and purchases by underinvested investors should support (US) equities until the summer. From summer onwards, volatility is likely to increase due to lower liquidity and probably weaker macro data.
Bonds
- Trump's tax plans are likely to increase the US deficit and weigh on long-term government bond yields.
- A weak auction of long-term US bonds and a downgrade by Moody's are additional burdens.
- Emerging market bonds may recover after April's setback, with spreads narrowing further as a result.
Alternative investments / commodities
- OPEC+ significantly expands supply. US shale oil producers are likely to suffer. Price potential limited with subdued demand growth.
- Gold remains in high demand in an environment of trade tensions and fiscal excesses.
- Industrial metals driven not only by macroeconomic factors, but also by strong idiosyncratic factors.
Currencies
- The Fed has no more room to cut key interest rates. This could strengthen the dollar.
- However, this is offset by the fact that the US economy is likely to lose momentum in the coming months.
- Overall, we therefore expect the euro-dollar exchange rate to move sideways for the time being.
