At a glance
Economics
- Hesitant upturn in Europe, economic slowdown in the USA, China's growth disappointing.
- Inflation rates are only declining very slowly, but are likely to fall slightly in the coming months.
- In September, the ECB is expected to cut its key interest rates again and the Fed will also herald a turnaround in interest rates.
Equities
- The equity markets have recently gained significantly in breadth, with a rotation towards small caps.
- The reporting season will shed light on whether market breadth could widen further on fundamental grounds.
- High index levels, US elections, reporting season and seasonality argue for a small underweight in equities in the short term.
Bonds
- Following the ECB's interest rate pause in July, the markets expect the ECB and the Fed to cut interest rates in September.
- Increased rate volatility and inverse rate structure on both sides of the Atlantic continue to favor duration close to neutral.
- IG segment valued more attractively than high-yield bonds. EM local currency bonds preferred.
Commodities
- Gold at all-time high, but drivers have recently turned around. Interest from financial investors increases as interest rates fall.
- Crude in solid starting position despite economic pessimism, but remains sideways for now on reactive OPEC+.
- Industrial metals suffer from China's weakness. However, supply remains tight. Recent weakness offers catch-up potential.
Currencies
- Recently, the euro has risen slightly due to diminishing French risk and possibly an earlier interest rate turnaround in the US.
- There could be short-term fluctuations in the euro-dollar exchange rate around the US presidential elections.
- Overall, however, we expect the exchange rate to move sideways until the end of the year.
