A sharp turn for the worse in US-China trade talks, the risk of a hard Brexit and renewed Italian fiscal woes have spoiled the rally in risk assets.
Given the high political uncertainty, we further reduce the pro-risk tilt in our portfolios. In particular, we cut our overweight in equities to almost neutral.
Thanks to solid domestic demand and accommodative central banks, we still see selected opportunities e.g. in longer dated corporate bonds.
We still expect a EUR/USD recovery later this year on fading US growth outperformance. But political uncertainties prevent us from taking an active position now.