At a glance
Economics
- US economy more robust than expected, soft landing ahead. China is slowly stabilising.
- Europe: Economy at low point, inventory correction in industry ends at the beginning of 2024, upturn from Easter.
- Inflation continues to fall, interest rate turnaround approaches: Fed, ECB and BoE cut interest rates from Q2.
Equities
- Equities with new all-time highs after bumpy start to the year. Market breadth remains low and large caps continue to dominate.
- Soft landing scenario remains market consensus. High investor positioning limits upside potential.
- We continue to feel comfortable with our balanced positioning. Small caps more attractive again as the economy recovers.
Bonds
- Yields on safe government bonds have risen since the beginning of the year in the face of hawkish central banks.
- Increased interest rate volatility on both sides of the Atlantic continues to argue for duration close to neutral.
- High yield valuation increasingly unattractive, IG fundamentally well positioned. EM local currency bonds favoured.
Commodities
- Gold remains robust despite the decline in interest rate optimism and continues to offer an attractive addition to the portfolio.
- Crude oil rose due to the attacks by the Houthi rebels, but the potential is limited due to sufficient supply.
- Chinese stimulus measures support industrial metal prices, rising industrial activity could provide a tailwind.
Currencies
- EUR/USD: Recently dollar strength rather than euro weakness thanks to robust US economy.
- EUR/CHF: Slightly stronger since the beginning of the year, but no real trend reversal yet.
- Future trends dependent on interest rate policy – European Central Bank sends very mixed signals.
