- Ruthless policy is rattling markets. Trump is ramping up pressure on China, while British PM Johnson is suspending parliament for under-pinning his determinedness to deliver Brexit.
- Uncertainties are poison for the economy and risk sentiment alike. The fiscal side remains hesitant. The duty of accommodation falls on central banks again, but policy effectiveness is in doubt.
- Yields are unlikely to bounce back soon. Looming ECB asset purchases and an intense search for yield keep supporting Credit. The risk of equity setbacks has risen, but cautious investor positioning and low yields keep us constructive.
- We trim overall risk weights, though,– especially in equities – as the balance of risks has deteriorated.