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A summer of reality checks on market expectations
Monday 09 September 2024
Global Investment Views, Equity, Fixed income
A summer of reality checks on market expectations
September 2024 | Markets are shifting their focus to economic growth as inflation continues to decline. The primary reason for this shift seems to be weakening consumption, which is now extending to wider sections of the economy. We believe this environment calls for a more prudent stance, and a tactical, incremental risk reduction rather than a structural de-risking. Overall, we are marginally positive on risk assets and suggest staying well-diversified. At the same time, we remain vigilant after the recent yield movements and are wary of potential fiscal risks.
01 | While most major markets have recovered from the volatility seen in early August owing to the Fed put, we cannot ignore the fact that some segments are still priced for perfection.
02 | Slowing, but not collapsing, labor markets could point toward a mild deceleration and a soft landing rather than a recession.
03 | The phase of central bank divergences may be coming to an end, with Japan an outlier. We expect three rate cuts from the Fed, and three each from the ECB and the Bank of England for the remainder of year.
Important Information
Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of September 5, 2024. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product or service. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not indicative of future results. Amundi US is the US business of Amundi Asset Management.
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Other news
10/07/2024
Global Investment Views, Equity, Fixed income
Fed rate cut boosts the markets – but for how long?
Capital markets whipsawed between a weakening US labor market and hopes that the Fed would successfully steer the economy towards a soft landing. Markets are optimistically interpreting the latest policy action, which could potentially boost consumption and investment. We now believe the Fed will ease policy by another 50 bps this year (75 bps previously expected), split equally between its two remaining meetings.
08/01/2024
Global Investment Views, Equity, Fixed income
Rotation and broadening in equities has started
US mega caps significantly outperformed the rest of the US markets in the first half of the year, driven by better-than-expected economic activity, exuberance over artificial intelligence and superior earnings. Looking ahead, we see a potential for a rally broadening, which will not be linear and is likely to have multiple legs. Some early signs of this rotation materialized recently after the July consumer price index report raised the chances of a Fed rate cut in September, while most recently fears on restrictions on the chip industry further supported this trend. This opens up opportunities into areas and segments (small caps, Europe, Japan) that have been left behind.
07/01/2024
Global Investment Views, Equity, Fixed income
Inflation trends, central banks and geopolitics to drive markets
In addition to central banks' policies and inflation trends, we believe domestic politics and their impact on international relations will be important determinants of financial markets and economic direction. Our economic outlook is relatively robust, but valuations are tight in some areas of risk assets, allowing us to stay slightly positive on equities overall. However, we reduced our stance slightly in developed market equities and believe investors should consider building protection in some areas here. In bonds, we are constructive on US duration and core Europe, while we maintain our cautious stance on Japan. In corporate credit, EU investment grade is our favorite area.
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