Our main convictions

Our Main Convictions

#1

Positive growth dynamics but with disparities across regions

The global economy should sustain its positive growth trend in 2024 but the pace of growth will vary by region. The United States economy is set to slow but will remain stronger than other major developed economies. European growth is likely to be more fragile overall but should gradually benefit from lower inflation and easing of monetary policy. In China, the troubled property sector is likely to prove an ongoing drag on growth.

#2

Central banks: rate cuts de-synchronised

Since the start of the year, inflation has been easing in major developed economies, reinforcing the idea that key central banks are nearing their pivot points. However, resurgent activity in the United States may prompt the Federal Reserve to tread more cautiously, pushing back its first rate cut to Q3, while the ECB could start reducing rates in June and cut by a total of 75 bps by year end.

#3

Overweight to equities, particularly US and Europe

Despite the recent market correction, we maintain our Overweight to developed equity markets. The economic environment should remain healthy, and we still expect rate cuts from the main central banks. We favour European markets, which offer attractive valuations, and US markets, whose economy remains strong. We have also maintained our Underweight to emerging equity markets, mainly because of the continuing difficulties of the Chinese economy.

Unless specified, all figures and statistics in this report are from Bloomberg and Macrobond on 18/04/2024, publication completion date. Past performance does not prejudge future performance. Investments may be subject to market fluctuations, and the price and value of investments and the resulting revenues may fluctuate downward and upward. Your capital is not protected, and original investments may not be recovered.

our strongest convictions

#5

Overweight dollar against European currencies

Changes in monetary policy were the main drivers of currency markets moves in 2023 and should remain so in 2024. As we now expect monetary policies to move out of synch, we have switched to Underweight the EUR/USD and GBP/USD, i.e. Overweight the dollar which should strengthen against the major crosses.

#6

Maintained Underweight to gold

Gold has been booming all year, helped in large part by heavy central bank buying and geopolitical tensions. Nonetheless, we remain Underweight as it appears less attractive in the context of high interest rates.

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#4

Constructive on government bonds and IG corporate bonds

Bonds continue to offer attractive carry, both in nominal and real terms, as inflation continues its gradual retreat. Sovereign and investment grade corporate bonds also offer an attractive diversification option in the alternative scenario where the world dips into recession, which would translate into much lower rates and a return to negative correlation between bonds and equities.