- Risk assets have recovered in full, despite the slump in exports and industrial data. This rally still has some potential for now.
- Global risks still abound (not least the US/Euro Area trade spat), but the near-term outlook appears rather friendly. We remain confident that a sharper global downturn will be avoided.
- Importantly, low inflation has helped central banks turn more dovish, creating the conditions for a ‘mini-Goldilocks’.
- We keep a pro-risk bias, with a prudent overweight in equities and an underweight in Govies. Also, we trim our short-duration bias especially in credit, where a steeper credit curve makes longer-dated Euro Investment Grade more attractive. Finally, we further reduce the cash overweight.