August 2024 | 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.
01 | We expect a mild deceleration expected in the US in the second half of the year, characterized by a rebalancing in labor markets, weakening consumption and the dichotomy between affluent and low-income consumers.
02 | There is little room for errors in monetary policy. Hence, central banks are being patient and are basing their decisions on incoming data, which according to us confirms the disinflation path.
03 | In the US, high levels of government debt will likely affect rates. As we get closer to the US elections, the narrative on how deficit spending will affect borrowing costs in long term will likely get louder.
Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of July 25, 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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