Highlights:

• Central banks are on a mission to fight inflation – whatever it takes, even a recession. The financial mood will remain gloomy this summer as economic data deteriorates while central banks walk their hawkish talk.
• We expect the Fed to turn less aggressive this autumn, as it faces a deterioration of the economy and, eventually, employment data. Inflation headlines will also cool off by then.
• The ECB’s political and legal capacity to reallocate its huge balance sheet to fight fragmentation will be put to test.
• We confirm our view, with an underweight in equities and an overweight in high-quality credit. Increase cash over summer, whilst reducing the shorts in core Govies.

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