Highlights:

• Markets have climbed a wall of banking worries, with the help of resilient economic data  and  earnings,  more  dovish  Fed expectations and fresh central bank liquidity.
• Yet we expect the looming credit crunch, lower earnings and rising defaults to still take their toll – and the laws of gravity to still apply.  The  war  in  Ukraine,  simmering US/China tensions and the US debt ceiling are adding to the downside risks.
• We maintain a cautious stance on Equities and  HY,  while  favouring  carry  from Government Bonds, non-financial EUR IG Credit and – more prudently – EM bonds. We also like US Treasuries for their hedging properties against more adverse scenarios.

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