Reflation boon and bane

Highlights:

In this latest issue of our monthly ‘Market Perspectives’, the experts of our Macro & Market Research Team focus among other topics on:

• While acknowledging stretched investor positions and residual risks from Covid-19 mutations, we expect a strong economic rebound in the spring to keep financial conditions underpinned.
• An intensifying US inflation debate, however, poses risks for fixed income. Equities should prove resilient, but the recent pick-up in real yields deserves to be watched. It is more toxic for highly valued risk assets, incl. Growth stocks.
• Overall, we maintain a moderate pro-risk tilt in our portfolios, with potential equity setbacks providing buying opportunities into a broader ‘spring reopening’.