GLOBAL VIEW – ENJOY SUMMER WHILE IT LASTS

As lockdowns have been lifted and global activity rebounded from the Q2 nadir, hopes of a strong recovery have helped risk assets advance further over July.

Highlights:

  • The policy-led rally has flattened out but we expect risk sentiment to be resilient over summer. Investor positioning, the economic bounce, dollar weakness and ongoing policy support still dominate for now.
  • But clouds will be mounting this autumn. Already the US recovery is floundering, and hopes of a Vshape will die after summer. Covid will prove more threatening, and political risk will be rising.
  • Our allocation recommendation retains a risk-on bias for now, but a cautious one, focused on IG Credit. The equity OW is minimal and defensive. We stay bearish USD and warn against duration shorts.

Download the full publication below

GLOBAL VIEW – ENJOY SUMMER WHILE IT LASTS

RELATED INSIGHTS

HEADWINDS FOR A BREXIT TRADE DEAL ARE RISING
Yesterday, a UK government fresh legislation proposal – the Internal Market Bill - led to heated discussions in the House of Commons. According to the UK government, the bill is intended to guarantee the smooth functioning of trade and prevent disruptions between the four nations of the UK, if no deal is reached with the EU by the end of this year’s transition period.
Q2 EARNINGS END ABOVE CONSENSUS, WITH THE US LEADING. EXPECT BETTER GROWTH AHEAD
Compared to our latest - positive - comment on the 20th of July, the yearly earnings growth of the median sector has improved both in the US and Japan, while the picture is less clear in Europe. Earnings surprises have also increased. On the contrary, reported sales growth and sales surprises have worsened since then.
COVID-19 FACTS & FIGURES
Sanofi and GSK are in advanced discussion with the European Commission to supply up to 300 million doses of an experimental Covid-19 vaccine.