Economics
- The mood in the eurozone is gradually brightening and points to an economic recovery.
- Inflation is falling in the UK and the economy is slowly gaining momentum.
- The US economy remains robust, but is cooling slightly.
Equities
- Equity markets have reached new highs following the correction in April. "Goldilocks" hopes are supporting share prices.
- We feel comfortable with a neutral positioning. Positioning and seasonality speak against too much optimism.
- Until the US elections, we expect a volatile sideways movement with limited upside potential.
Bonds
- Inflationary pressure in the USA remains high. The ECB is preparing to cut interest rates in June.
- A good reporting season and robust risk demand are supporting the narrowing of spreads in the IG and HY segments.
- The declining volatility of US government bond yields is supporting emerging market bonds.
Alternative Investments / commodities
- Gold reached a new all-time high in May but has recently seen a slight consolidation. Further potential with positive ETF flows.
- Crude oil sideways with low volatility. Geopolitical risks and recovery in demand offer upside opportunities.
- Industrial metals recently (strongly) driven by speculation. Short-term consolidation likely, medium-term potential unaffected.
Currencies
- Earlier interest rate turnaround by the ECB compared to the Fed already largely priced in.
- Currency effects of falling interest rates will be offset by economic recovery.
- Monetary policy turnaround in Switzerland has weighed on the franc, but the ECB will soon follow suit.
