- Given the surge in government and corporate debt, policy will inevitably focus on making this load sustainable: finan-cial 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.
- Still, investors need to start looking beyond the Covid crisis. The economic recovery is set to continue, and supports a shift towards more cyclical assets, such as emerging currencies and equities. The USD may pause just now, but is in a structurally bearish trend.
- Our largest overweight remains in Credit, where we recommend to go down the rating scale but not too much (BB).
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THE NEW AGE OF FINANCIAL REPRESSION