Counter-cyclical and balanced positioning preferred

At a glance

Economics

• Weak growth in the eurozone, with no pick-up expected until spring 2025.
• The US economy is set for a soft landing. Interest rate turnaround points to more growth from spring 2025.
• The US election could change the outlook. Trump represents a short-term economic boost with long-term risks.

Equities

• Positive economic data, a solid earnings season and gradual interest rate cuts are supporting the US equity market.
• Global liquidity, hopes of a soft landing and an increased likelihood of a Trump victory are causing the market to widen.
• The US election remains a source of uncertainty. Counter-cyclical behaviour and balanced positioning are preferred.

Bonds

• Bond markets have priced in a sharp fall in interest rates on the back of better-than-expected economic data.
• Trump's policy agenda (tariffs, immigration, debt) increases the risk of inflation. We are keeping duration close to neutral.
• High inflows, strong balance sheets and a positive economic outlook remain supportive for credit despite high valuations.

Commodities

• Gold at next all-time high despite strong dollar and high real interest rates. Interest from financial investors rises as rates fall.
• Crude oil has recently been affected by the Middle East conflict. Oversupply and rising inventories are negative in the mid-term.
• Industrial metals benefit from Chinese stimulus, with long-term growth supported by stable demand.

Currencies

• The US dollar has recently been in demand as a safe haven.
• A smaller growth differential between the US and the eurozone by 2025 could support the euro.
• On the other hand, a potential Trump victory in the US presidential election would be good news for the dollar.