31. Mai 2023

Mind the gap(s)

In Kürze

As acute banking woes moved to the back burner and US president Biden and House leader McCarthy struck a lastminute deal on the debt ceiling (with final Congress vote still pending at the time of writing), markets were headed to end May on a resilient note.

Highlights:

A prospective last-minute deal on the US debt ceiling, resilient US activity and an AI boost to IT chip producers have helped risk assets to digest rising yields well in May.
But mind the various gaps that are emerging. Pent-up demand in services is deeply overshadowed by mounting trouble in manufacturing. Equity and HY Credit resilience contrasts strong signs of a looming US recession, markedly higher real yields and evidence of a credit crunch.
We stick to a prudent tactical tilt in our portfolios, moderately underweighting (UW) Equities and HY. We favour the carry from IG Credit and Government Bonds while avoiding unhedged USD exposure.

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Market Perspectives ǀ Mind the gap(s)

31. Mai 2023