Off Crutches

In breve

This wobbly feeling. The global economy has walked (and even run) on crutches for the past eighteen months, with formidable monetary and fiscal policy support fostering the recovery and a luxuriant period for global markets. Goldilocks still ruled for most of summer, with bond yields pulling back as global growth hit a speed bump but equity investors raving about a stellar Q2 earnings season.


  • The global economy has hit a speed bump, built on the Delta variant and supply chain issues; we expect growth to find a floor in H2, as the fourth Covid wave recedes, and China cautiously eases policy. But supply constraints are proving sticky, and surging commodity prices are a new threat to the consumer outlook. That risk deserves hedging.
  • The global economy has enjoyed massive policy support over the past eighteen months. It is time to take the crutches off. The fiscal impulse is turning, not least in the US, and central banks are about to taper bond purchases. This has been well telegraphed, but sticky inflation creates new policy uncertainties, making the markets more volatile. As supply issues dominate both US employment and inflation, monetary policy efficacy is in doubt.
  • Bond yields are recovering from the summer (reopening) slump. We see more upside but expect self-correcting mechanisms to contain the move. We hold an underweight in Govies, and a small duration short for now, but will not get too greedy with entry levels. We see Credit as offering a decent low-volatility carry still, but are now more selective.
  • The three major tailwinds for equities (profit growth, money printing and fiscal impulse) are flattening out. So will the returns. But we still find equities cheap vs. bonds and go back to a stronger Value bias.

Download the full publication below

Investment View Q4-2021 ǀ Off Crutches

© Generali Investments, tutti i diritti riservati. Questo sito web è fornito da Generali Investments Holding S.p.A. in qualità di holding delle principali società di gestione del risparmio del Gruppo Generali che detengono, direttamente o indirettamente, la maggioranza delle partecipazioni nelle società sotto elencate (di seguito, congiuntamente, "Generali Investments"). Questo sito web può contenere informazioni relative all'attività delle seguenti società: Generali Asset Management S.p.A. Società di gestione del risparmio, Infranity, Sycomore Asset Management, Aperture Investors LLC (inclusa Aperture Investors UK Ltd), Plenisfer Investments S.p.A. Società di gestione del risparmio, Lumyna Investments Limited, Sosteneo S. p.A. Società di gestione del risparmio, Generali Real Estate S.p.A. Società di gestione del risparmio, Conning* e tra le sue controllate Global Evolution Asset Management A/S - incluse Global Evolution USA, LLC e Global Evolution Fund Management Singapore Pte. Ltd - Octagon Credit Investors, LLC, Pearlmark Real Estate, LLC e Generali Investments CEE. *Comprende Conning, Inc., Conning Asset Management Limited, Conning Asia Pacific Limited, Conning Investment Products, Inc. e Goodwin Capital Advisers, Inc. (collettivamente, "Conning").