Edited by the Macro & Market Research Team.
A team of 13 analysts based in Paris, Cologne, Trieste, Milan and Prague runs qualitative and quantitative analysis on macroeconomic and financial issues.
The team translates macro and quant views into investment ideas that feed into the investment process.
One fourth of Investment Grade (IG) bonds have now negative yields; this radically alters portfolio considerations. The threshold for switching away from risky assets is higher than it used to be.
A global recession is not our core scenario, but monetary and fiscal support are required. We assume none of the three major risks (Brexit, US/China trade war, Middle East tensions) will materialize in the worst way.
In the upside-down world of negative yields, IG Credit is a new safe haven, as shown by relative low IG yield volatility. Equities remain cheap relative to bonds, and the Fed will remain more supportive than what the latest dot plot shows.
As a consequence, we prefer longer dated IG bonds over Sovereigns. Our mildly pro-risk allocation foresees an underweight in short-dated EUR Govies and cash. With the USD near its peak, Emerging Markets’ equities and bonds offer selective opportunities.
13/01/2020
Edited by the Macro & Market Research Team. The team of 13 analysts based in Paris, Cologne, Trieste, Milan and Prague runs qualitative and quantitative analysis on macroeconomic and financial issues.
The team translates macro and quant views into investment ideas that feed into the investment process.
18/12/2019
As the tide of easy monetary policy slowly goes out, global markets face another challenging year. Yet 2019 will be very different from 2018, as the US economy is set to fall off its pedestal; the Fed will pause this summer, if not before. The great regional divergence of 2018 will thus end, and with it the impressive USD rally. This should bring selective relief to Emerging Markets, assuming the world economic landing continues to be soft.
Read Now17/12/2019
In this video Vincent Chaigneau, Head of Research, shares key market views for the coming year. Find out more!
Read Now