Poison of uncertainty

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.

Highlights:
  • 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. 
Download the full publication below
POISON OF UNCERTAINTY

RELATED INSIGHTS

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.
Generali Investments among preferred asset managers brands in Europe
Listen to the dedicated Podcast by Vincent Chaigneau, Head of Research, on our view on the economic recovery, new behaviours in the aftermath of the pandemic and the unique opportunities for a European fiscal and political integration.
PODCAST:
LIFE AFTER COVID -
THE LDI VIEW
Listen to the dedicated Podcast by Vincent Chaigneau, Head of Research, on our view on the economic recovery, new behaviours in the aftermath of the pandemic and the unique opportunities for a European fiscal and political integration.