Market Insights
January 2024 Review

Few catalysts for very active positioning in the short-term
– Too many rate cuts priced in the market
– Few risks anticipated given valuations of risky assets
– Excessive valuation when looking at risk premia
– More economic downturn to come with no major recession

Asset classes:

– 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:

– Core sovereigns have not sold off enough
– 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 and EUR over USD
– 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