- The rally in risky assets is likely to flatten out. Rising new infections into the autumn and political risks (US politics, Brexit, Greece-Turkey confrontation) will hit sentiment.
- Yet recovering data, committed central banks, falling Covid-19 lethality and optimism about vaccines still support a slight pro-risk bias.
- We keep a prudent over-exposure to risky assets, centered on high-quality buckets of Credit.
- Longer term, we look to increase the pro-cyclical bias in portfolios as the Covid paralysis fades out.