CROSS ASSET Investment Strategy: The current repricing is a reminder of a regime shift in which stagflationary concerns are becoming prominent. Investors should move towards quality segments in credit and equities, and aim to benefit from the regional divergences that
Explaining portfolio returns through Fama-French-Carhart models supposes linearity between returns and risk factors. It makes it possible to simply identify relationships as a linear combination of factors, while in reality, these relationships could be much more complex. In support of
Green and sustainable investment in emerging markets and developing economies (EMDEs) rebounded from pandemicrelated challenges to reach record levels in 2021. This report provides an overview of developments in the market for green bonds issued in these economies and for
Federal Open Market Committee (FOMC) meeting and statement: On 15 June, the Fed hiked the Fed funds rate by 75bp, to 1.50-1.75%, the first 75bp rate rise since November 1994. Chair Jerome Powell confirmed that recent readings regarding consumer inflation
We started the year with expectations of strong growth and high inflation throughout the first part of 2022. The Russia-Ukraine war accentuated the inflationary trend, now well above Central Bank (CB) targets, which is now set to persist longer than
Spain’s public finances and the trajectory of Spanish debt: The debt/GDP ratio rose to 120% in 2020 after the shock of the Covid-19 pandemic. The country’s debt and deficit sustainability face two main headwinds: a more adverse funding profile due
Italy’s public finances and the trajectory of Italian debt: The debt/GDP ratio rose to 150% in 2021, impacted by the shock of the Covid-19 pandemic. But we observe a somewhat stronger decline in the ratio for any given level of
Global economy is slowing, due to the fallout from the Russia-Ukraine war, supply bottlenecks and China’s zero-tolerance Covid-19 policy. CBs will tighten financial conditions to tame persistent inflation. A global recession is not our main scenario, but there are areas
Last year global sustainable debt issuance hit a record of over $1.4tn, with the overall sustainable debt universe expanding to near $3.4tn. In the first quarter of 2022 this healthy trend halted temporarily, as high energy prices and rising borrowing
Riding the Green Wave: Green and sustainable investment in emerging markets and developing economies (EMDEs) rebounded from pandemicrelated challenges to reach record levels in 2021. This report provides an overview of developments in the market for green bonds issued in
United States: After the contraction in Q1 (resulting from an outsized detraction from net exports and a payback from the surge in inventories in Q4, not from weak demand) we expect sequential growth to pick up from Q2 and stabilise
The idea that there is a comfortable degree of budgetary room for more active fiscal policy goes hand-in-hand with the assumption that a sustained bond correction (higher safe real interest rate) is not only unjustified based on fundamentals, but is
The rise of the narrative concept and how it can help financial market understanding. A narrative is a popular story that arises from the public consciousness of market events. The most viral and intense of these may dominate public attention.
Today climate change is arguably the most critical long-term challenge that humanity is facing. “Climate action failure” is not only the top longterm threat in the World Economic Forum’s Global Risks Report for 2022, but is also a key element
We keep the probabilities of our central and alternative scenario unchanged versus last month but amend the narrative to take into account the evolving geopolitical situation (see Ukraine crisis tree).The new wave of Covid-19 in China and stagnation in the
CROSS ASSET Investment Strategy – June 2022: The repricing of a more aggressive Fed stance has been brutal as the 10Y UST yield temporarily reached the 3% threshold, falling close to 2.75% recently on economic growth concerns. We think investors
The second quarter of the year is becoming increasingly painful for tech stocks, recalling memories of the 2000s tech bubble bursting. The repricing of a more aggressive Fed stance has been brutal, real yields rose – the rate on 10-year
Identifying, monitoring and preventing human rights violations is not only a government responsibility but also a corporate concern. Operations across a company’s value chain play a key role in human rights outcomes as reflected in the 10 principles of the
Diverging economic outlooks in Europe, US and China, along with persisting geopolitical risks, underscore the need to explore relative value opportunities across asset classes. On duration, we think investors should be flexible but no longer as short as they were
We are witnessing significant divergences in the economic outlook (we have revised down the EU and Chinese economic outlooks vs. the more resilient US economy) and in market performances. In particular: (1) Inflation expectations – short-term peak vs. long-term rise:
Inflation was already running well above central banks’ targets as we entered the year. The war has put additional pressure on prices and supply chains and this could have repercussions not just on oil, but on other commodities as well.
April meeting: No further acceleration of stimulus withdrawal was hinted at by the ECB in April. It confirmed both the previous guidance on QE (likely to end in Q3) and the policy sequence, with interest rates to rise at “some
Market assessment: After an initial negative reaction to the Russia-Ukrainian conflict, US equities markets are now above their pre-war levels. US equity volatility has proven much lower compared to Europe, which is more exposed to the crisis and to the
Ukraine: where do we stand? The first month of the Russia-Ukraine war has driven volatility up across the board, though with some recent signs of stabilisation in equity markets. Europe is the area most exposed to the war – in
Monthly update We keep the narratives and the probabilities of our central and alternative scenario unchanged versus last month. The war in Ukraine could evolve in several ways over the coming weeks (see Ukraine crisis tree) with significant implications on
The third year of the Covid crisis began with renewed concerns over the interplay between surging inflation and an economic recovery contingent on concerns over policy tightening, a trend further accelerated by the Russian-Ukrainian conflict. While we collectively gather ourselves
Ukraine: where do we stand? The first month of the Russia-Ukraine war has driven volatility up across the board, though with some recent signs of stabilisation in equity markets. Europe is the area most exposed to the war – in
As the war unfolds in Ukraine, the understanding of its impact on the global economy is changing rapidly and some excellent analysis has already been produced. In this paper, Amundi Technology and Amundi Institute have used the Causality Link platform
Winds of war blow on economic outlook. The first month of the Russia-Ukraine war has driven volatility up across the board, though with some recent signs of stabilisation in equity markets. Europe is the area most exposed to the war
The economic damage from the Russia-Ukraine conflict has made the Emerging Markets (EM) outlook more uncertain. While the uncertainty persists and the final outcome of the war is still difficult to anticipate, we believe that macro fundamentals will be impacted
Key takeways Climate change commitments have stepped up recently but have yet to fully answer the call. National commitments should not constitute a limitation or constraint for a business entity to set ambitious net zero targets that are aligned with
Global markets were not pricing in a war scenario and are now adjusting given the magnitude of this military move. It will take time for the situation to settle down. In the meantime, uncertainty and volatility will persist, with the
The geopolitical escalation at month’s end marks a further rise in volatility, even as the Fed and the ECB displayed hawkish overtures earlier. We suggest a more cautious stance in credit amid rising liquidity risks and a less appealing risk/return
January 2022 was a record month for European value equity, in terms of its outperformance vs. growth. The market’s reassessment of central banks’ actions after their hawkish turn has driven real yields higher and benefitted value stocks, while growth sectors
In this paper, we intend to gain an understanding of the drivers of stock convexity, also known as gamma. First, using a bottom-up – firm-level – approach, we showcase that stock fundamentals, in particular metrics related to value (captured by
Following the last Intergovernmental Panel on Climate Change report on the climate emergency (IPCC, 2021), countries, companies and investors are increasingly acknowledging the …
2022 will be the “year of reckoning” for DM economies when they will test the effectiveness of the policies deployed since the peak of the pandemic phase and face the challenge of retuning to normality: fiscal and monetary policies will
In this paper, we intend to gain an understanding of the drivers of stock convexity, also known as gamma. First, using a bottom-up – firm-level – approach, we showcase that stock fundamentals, in particular metrics related to value (captured by
2022 will be the “year of reckoning” for DM economies when they will test the effectiveness of the policies deployed since the peak of the pandemic phase and face the challenge of retuning to normality: fiscal and monetary policies will
War of nerves between Russia and Ukraine, geopolitical risk back in focus Geopolitical dimension of the crisis: tensions stand at their highest point in years, after Moscow deployed 100,000 troops to its border with the Ukraine’s Donbas region. The geopolitical
FOMC statement: it was consistent with investor and market expectations. With its two criteria having been met (price stability and full employment), the Fed indicated that the start of the rate normalisation cycle is soon. The Fed probably avoided referring
Inflation was the big surprise in 2021. At the beginning of the year, the average US inflation forecast by economists for the end of 2021 was around 2%, while the latest reading in December came in at 7.0% YoY, the
A challenging year ahead: According to our 2022 Investment Outlook, next year will feature growth deceleration, persistent inflation pressure and asynchronised central bank action. 2022 will also be a pivotal year for the transition to carbon neutrality and the development
FOMC statement: The tone of the Federal Open Market Committee (FOMC) statement was hawkish, with a focus on higher inflation risks and more aggressive policy tightening. There were notable changes to the statement: the Fed retired the word ‘transitory’ to
Omicron uncertainty; inflation certainty The resurgence of the virus cycle, central banks’ reactions to high inflation figures, and Evergrande’s unavoidable default have led to some volatility in the market, but these issues have not caused any major disruption. In the
Because of the 2015 Paris Agreement, the development of ESG investing and the emergence of net zero emission policies, climate risk is certainly the most important topic and challenge for asset owners and managers now and will remain so over
Omicron uncertainty; inflation certainty The resurgence of the virus cycle, central banks’ reactions to high inflation figures, and Evergrande’s unavoidable default have led to some volatility in the market, but these issues have not caused any major disruption. In the
Although its decarbonisation has been under way for several years now, as highlighted by the strong growth in renewable power capacities, the power sector still accounts for 38% of global energy- and industryrelated CO2 emissions. – The decarbonisation pace of
Understanding why we must shift from a linear to a circular model is key for our future. Hard law is being introduced in many countries, especially in the EU and is going to change the way companies can produce and
10 KEY MESSAGES FROM THE 2022 INVESTMENT OUTLOOK The road back to 70s narrative gains traction. Secular stagnation is a thing of the past, the “roaring 20s” – a new economic miracle – a dream. Global growth will return to
