Market Compass
October 2020

Edited by the Macro & Market Research Team.
A 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.

Highlights

  • The surge in government and corporate debt will make its sustainability akey priority: financial repression, by means of extra low interest rates, isset to reach a whole new level.
  • Investors will need to navigate many icebergs this autumn: Coviduncertainties, a hard (or semi-hard) Brexit, the US elections. So ourpositive risk bias is cautious.
  • Looking beyond the Covid crisis, the economic recovery is set to continue, and supports more cyclical assets, like emerging currencies and equities.
  • Our largest overweight remains in Credit, where we recommend to godown the rating scale but not too much (BB).
Market Compass October 2020

Related insights

INVESTMENT VIEW Q4: THE NEW AGE OF FINANCIAL REPRESSION
Given the surge in government and corporate debt, policy will inevitably focus on making this load sustainable: financial repression, spearheaded by central banks, is set to reach a whole new level. − Investors will need to navigate many icebergs this autumn: Covid uncertainties, a hard (or semi-hard) Brexit, the US elections and the risk associated to the crowding of positions (Growth stocks). So our positive risk bias is cautious.
Market Compass September 2020
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.
COVID PARALYSIS RECEDES AS POLITICAL RISK RISES
After a buoyant August for risk assets, the rally is likely to flatten out. Rising new infections into the autumn, a leveling recovery pace and diverse political risks (US politics, Brexit, geopolitics) will keep a lid on risk sentiment.