Horizon Handout May 2024

Economics

• The Eurozone economy is regaining momentum only slowly after the near-stagnation of 2023.
• Lower inflation and expected interest rate cuts are setting the stage for the British economy to make up for lost ground.
  
• The US economy is thriving despite a restrictive monetary policy.

Equities

• Equity markets have recently corrected slightly. US equities have fallen more sharply than their European counterparts.
• We have used the recent weakness to neutralise our equity exposure and reduce our US underweight.
  
• Until the US elections, we expect a volatile sideways movement with limited upside potential.

Bonds

• Interest rate cut expectations for the Fed further reduced in view of stubborn inflation data in the USA.
• Idiosyncratic stress in the high-yield corporate bond segment. IG fundamentally and technically well supported.
  
• Positive economic data in the emerging markets continue to make the local currency bond segment attractive.

Alternative investments / commodities

• Gold defies higher real interest rates, a firm dollar and ETF outflows. Hot in the short term, but still an important hedge.
• Crude oil in a sideways trend without geopolitical escalation. Supply and demand currently appear to be in balance.
  
• Industrial metals benefit from recovery in the manufacturing sector and ban on Russian metal. Overheated in the short term.

Currencies

• Several factors are currently giving the US dollar a tailwind.
• The markets have already priced in that the Fed will start cutting interest rates much later than the ECB.
• In the coming months, some of the factors currently supporting the US dollar could weaken.