Bottom Line

→ We maintain our strategic balance between equities and fixed income.

→ Our highly diversified positioning affords us at least partial protection from turbulence on equity markets thanks to our sovereign bond, hedge fund, and gold exposure.

→ Within our equity exposure, we favour defensive sectors and remain underweight in more expensive regions such as the US.

The economic outlook remains in “contraction” territory specifically with a view towards the US, where further tightening of financial conditions following the banking turbulence will provide additional drag. However, other factors such as consumer expectations and normalisation of the yield curve are likely to prevent further deterioration.
Valuations are “expensive”, although they have softened somewhat in the wake of the latest bout of volatility. We continue to prefer cheaper regions, such as the UK, Europe or Japan, over more expensive US equities.
Momentum for equities remain positive despite their drawdown in March, based on the 10-months moving average metric that we favour. This suggests a positive outlook for risk assets in the short term.
Sentiment in markets has recovered to “neutral” territory, driven by less bearish equity fund flows and a weakening US dollar.

As ever, we are constantly monitoring markets. Should conditions change, particularly with regards to the economic regime or signals from our valuation, momentum and sentiment framework, we will adjust our asset allocation accordingly.

In accordance with the regulations in force, we inform the reader that this document is qualified as a promotional document. Unless specified, all figures and statistics in this report are from Bloomberg and Macrobond on 17/03/2023, publication completion date.