October 7, 2019

Market Compass
October 2019

Share on facebook
Share on twitter
Share on linkedin
Share on email

In Short

Edited by the Macro & Market Research Team. The team of 13 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
October 2019
Share on facebook
Share on twitter
Share on linkedin
Share on email
  • One fourth of Investment Grade (IG) bonds have now negative yields; this radically alters portfolio considerations. The threshold for switching away from risky assets is higher than it used to be.

  • A global recession is not our core scenario, but monetary and fiscal support are required. We assume none of the three major risks (Brexit, US/China trade war, Middle East tensions) will materialize in the worst way.

  • In the upside-down world of negative yields, IG Credit is a new safe haven, as shown by relative low IG yield volatility. Equities remain cheap relative to bonds, and the Fed will remain more supportive than what the latest dot plot shows.

  • As a consequence, we prefer longer dated IG bonds over Sovereigns. Our mildly pro-risk allocation foresees an underweight in short-dated EUR Govies and cash. With the USD near its peak, Emerging Markets’ equities and bonds offer selective opportunities.

MARKET COMPASS
OCTOBER 2019

Also interesting

Financial-and-technical-data-analysis-chart
July 30, 2021
Market Commentary

Market Commentary: Q2 reporting season is doing well but annual growth has peaked

size 3
July 29, 2021
Market Commentary

COVID-19 UPDATE Facts & Figures – 29/07/2021

federal-reserve-building-with-twenty-dollar-bill-on-grunge-texture-picture-id175716236
July 28, 2021
Market Commentary

MARKET COMMENTARY – The Fed: the recovery is on track, tapering is approaching