Economic Hardship vs. Policy Deluge

Defying the deepest global post-war recession, risk assets have continued to climb the wall of worries.

 

Highlights:

  • Defying the deepest global post-war recession, risk assets have continued to climb the wall of worries.
  • Flattening new cases in the advanced economies and the continued policy deluge will help to keep sentiment underpinned.
  • The air is getting thin, though, with US equity markets back to autumn 2019 levels. Key risks are a second wave of infections and the fast deterioration in US/China relations.
  • We stick to a pro-risk tilt concentrated in the higher quality buckets of risk assets, even as cyclical assets are showing signs of life. Keep a small long duration bias given the ‘swoosh’ recovery, disinflation and continued central bank activism.

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Market Perspectives 06/2020

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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.