Positive start to the year after a difficult 2022

At a glance

Economics

• US: Inflationary pressure easing. Mini recession likely in 2023, soft landing possible. Upswing in 2024.
• Europe: Gas situation easing. Mild recession in winter, new upswing from summer. Inflation slowly declining.
• Central bank interest rate summit in sight. US Fed cuts rates from late autumn, ECB not until 2024.

Equities

• Good start to the year thanks to forward guidance and technical buying. European equities and cyclicals outperform.
• China opening and absence of energy crisis offers potential for emerging markets and European equities.
• We maintain neutral positioning on equities as earnings, interest rate and economic risks still exist.

Bonds

• Recovery rally analogous to equities. 10-year yields have fallen since the start of the year. Euro periphery spreads offer potential.
• Corporate bonds attractive with high yields and solid balance sheets. Local currency bonds preferred in emerging markets.
• Relative attractiveness of bonds over equities has risen markedly due to yield advantage. Duration: neutral.

Commodities

• Gold recently boosted by technical factors. Limited diversification effect. Potential with Fed pivot.
• Oil with upside potential when China opens. Downside risks limited by SPR purchases and increased production costs.
• Metals surprisingly robust thanks to ongoing supply shortages. Decarbonisation provides long-term tailwind.

Currencies

• Outlook for the euro continues to brighten. The euro is gaining against the US dollar, also because the dollar is losing attractiveness.
• The pound has calmed down after the political turbulence. Nevertheless, it is falling back against the strengthening euro.
• The Swiss National Bank is counting on a strong franc in its fight against inflation. EUR/CHF remains below parity.