- Just as the trade truce provided broad-based relief, the Coronavirus is unsettling global markets.
- The fast-spreading disease is challenging the tender global macro green shoots, but we still see resilience in US and EA domestic demand.
- Experience from past episodes suggests that markets tend to overshoot, but rebound sharply once the number of new infections starts to slow.
- Even before the Coronavirus, we had embraced a slightly more cautious stance on early signs of investor complacency. We maintain a (smaller) prorisk tilt in the portfolios, but reduce overweights in Equities and HY Credit. We keep our overweight in IG corporates and underweight in core bonds.
Download the full publication below