At a glance
Economics
- Initially weak growth in the eurozone, German reforms could contribute to more momentum from spring onwards.
- The US economy remains robust. Trump's programme gives economy a short-term boost with long-term risks.
- Inflation remains stubborn, especially in the USA (tariffs, wage pressure). Fed interest rates remain high, ECB can cut further.
Equities
- Europe is outperforming, at least temporarily. However, structural problems and weak growth remain.
- Global liquidity, rate cuts and growth provide support. Market breadth should increase.
- US policy remains a source of uncertainty. Counter-cyclical action and balanced positioning needed.
Bonds
- The Fed's surprisingly hawkish outlook for this year and the robust US economy supported US yields.
- Trump's policy agenda (tariffs, immigration, debt) increases the risk of inflation. We are keeping duration close to neutral.
- High cash inflows and solid fundamentals continue to speak in favour of credit despite high valuations.
Commodities
- Gold remains well supported by falling interest rate expectations and geopolitical uncertainties.
- New sanctions on Russian energy exports and colder temperatures are supporting oil.
- Industrial demand for copper and aluminium remains firm.
Currencies
- The dollar has appreciated significantly in Q4 2024 as the market is pricing in an end to interest rate cuts in the USA.
- However, the tailwind for the greenback is likely to ease somewhat as the year progresses.
- The Swiss National Bank continues to try to limit the strength of the Swiss franc by lowering the key interest rate.
