Market Compass December 2021

In Short

Edited by the Macro & Market Research Team. The team of analysts based in Paris, Cologne, Trieste, Milan and Prague runs qualitative and quantitative analysis on macroeconomic and financial issues. The team translates macro and quant views into investment ideas that feed into the investment process.
Market Compass

Highlights:

  • Omicron is unsettling markets and uncertainty will remain high until the variant’s impact on Covid deaths and hospitalisations becomes clearer. 
  • Central banks may delay their withdrawal of policy accommodation. But given the deteriorating growth/inflation mix and persistent global supply bottlenecks, the scope for monetary policy support is limited.
  • Short term, we favour a very prudent tactical stance amid high uncertainty. But with the earnings outlook still decent and valuations supported by low real yields, the recent market correction may justify a cautious overweight in risk assets. 
  • We still expect yield to rise but background risks will limit the upside.  

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Market Compass December 2021
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