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The AI boom has had less of an impact on the economy than widely believed. This may eventually change, but the risk is that investors grow impatient before it does.
EM sovereign and corporate credit spreads are set to widen. Within a global credit portfolio, maintain a neutral allocation to EM credit markets versus US corporate credit. Favor EM local currency bonds over EM USD bonds.
The Norges Bank will cut rates only once until year-end as the NOK weakens and inflation hovers around 3%. Expect aggressive easing next year as the economic recovery is delayed by weakness in the energy sector and the labor market deteriorates.
Colombian markets will be torn between expectations of future orthodox policies and the reality of a worsening macro backdrop in the next 12 months. To balance risks, we are upgrading Colombian equities, local bonds, and sovereign credit from underweight to neutral versus their respective EM benchmarks.
US tariffs will not derail the low-inflation economic recovery underway in the Euro Area. Investors should overweight European equities, focusing on parts of the market more insulated from tariffs.
Data received since we began reassessing our bearish stance supported our notion that the economy is not as strong as the investor consensus perceives. But the softness will likely have to intensify in July and August to preserve our defensive recommendations.
The BoE is easing, but risks falling behind. Labor and growth cracks are starting to emerge, and the Bank may soon be forced to move more decisively. This report outlines why gilts remain a buy and sterling’s path is diverging vs. USD and EUR.
US TMT stocks have been delivering miraculous profit performance. Yet, outside US large tech, global equity fundamentals and technicals are troublesome. A near-term USD rebound should be faded.