From a «Soft landing» to a «No landing»: that is the story since the beginning of the year
With a global repricing of the rate cuts’ expectations from the main central banks
Few risks anticipated given valuations of risky assets
Excessive valuation when looking at risk premia
More economic downturn to come, with no recession
→ Few catalysts for very active positioning in the short term
Equity : – EU equities are cheaper on an historical basis – US equities are more expensive but not at extremes either, when looking at equally weighted indices – Equities are rich versus High Yield, mainly due to the Tech sector
Fixed Income : – Although yields have sold off since our last committee meeting, core sovereigns may still correct upwards a little – Tight spreads on the Credit and less attractive yields than a few months ago BUT of interest in a context of rate cuts to come – Favour Investment Grade over High Yield ; more neutral on Investment Grade between US and EU – Favour exposure on the belly of the curve – Financials offer decent spreads versus Non Financials, even on the senior bonds
Emerging Debt : selective on EM countries and positive on Local currency Debt
