FLASH – Evergrande
Xavier Hannaerts, Head of Investments & Conducting Officer et Aykut Efe Economist & Strategist chez Spuerkeess Asset Management exposent le contexte...
Here we go again. We thought China and the US were close to agreement, but Donald Trump could not leave matters alone. The escalation in customs duties continues but, in reality, it’s just a pretext to avoid technological conflict between the two nations. This conflict is weighing on global confidence, prompting the International Monetary Fund to revise down its 2019 growth forecasts.
The World Trade Organisation followed suit: it forecasts that trade tensions will drag out the slowdown in global trade, which began in late 2018. This slowdown is also set to affect industrial activity on a global scale.
The United States are somewhere between fatigue and endurance: real GDP growth may well be above expectations, but we note that household consumption has dipped – an early sign it is running out of steam. For its part, Europe is beset by political and budgetary preoccupations, and suffering from weakening confidence. However, accommodative monetary policy means an environment of low interest rates and conciliatory financial conditions can be maintained, not to mention a dynamic, well-established labour market. Overall, the outlook is encouraging, but only up to a point: the trade tensions call for prudence and mean we are lowering our exposure to cyclical sectors that are more dependent on the good health of the economy.
Bond markets are seeing lower yields, following the same pattern as growth. Europe is held hostage, with the 10-year Bund yield falling into negative territory. On the European credit market, lacklustre returns mean we are remaining cautious and holding back from this segment.
In the United States, the Federal Reserve's tone is more accommodating, against a backdrop of stagnating inflation and an interest-rate curve whose shape points to a recession.Marc Fohr
However, this is not imminent, in our view. This is why we are maintaining our neutral stance towards the US interest-rate curve. Moreover, the outlook is sunny for the investment grade credit universe: our approach involves favouring high-quality stocks with only weak links to the economic cycle and yield demands, and we are remaining positive about this segment.