Investment View Q3-2021 ǀ Unplug vs. unanchor

In Kürze

Peak growth, peak policy? Don’t exaggerate it. The global economy will still grow above-potential in the second half of the year. The Fed’s new AIT mandate lacks clarity, and re-interpretations will cause hiccups. But the policy unwind will be slow; so will be the transition from early- to mid-cycle. The rising stock-bond correlation is bad news for diversification: how to invest?

Highlights:

  • There is a slightly scary side to being at both peak policy and peak growth. Do not exaggerate it, however. The policy unwind will be slow, while economic growth will stay above potential in 21H2.
  • US inflation has surged. The shock is partly transitory, yet we have good reasons to believe that inflation will not return to the very muted pre-Covid trends. The Fed will navigate between the opposite risks of unplugging policy support too quickly and losing control of inflation expectations.
  • The Fed’s new AIT mandate lacks clarity, and occasional re-interpretation will cause hiccups: beef up hedges. Yet the June FOMC is testimony to its communication skills; expect the cautious approach to support a slow transition from early to mid financial cycle. In particular, we find it premature to chase yield curve flatteners.
  • The rising stock-bond correlation is bad news for diversification. We retain a positive risk stance, but scale down our equity overweight, both in size and structure (long Value vs. Growth, but less keen on Cyclicals vs Defensives). Credit remains a good carry trade, even at that level of spreads. Stay short Govies and duration. Reduce USD bearish trades.

Download the full publication below

Investment View Q3-2021 ǀ Unplug vs. unanchor
PDF
Picture

© Generali Investments, alle Rechte vorbehalten. Diese Website wird von der Generali Investments Holding S.p.A. als Holdinggesellschaft der wichtigsten Vermögensverwaltungsgesellschaften der Generali Gruppe zur Verfügung gestellt, die direkt oder indirekt die Mehrheitsbeteiligung an den unten aufgeführten Gesellschaften hält (im Folgenden gemeinsam "Generali Investments"). Diese Website kann Informationen über die Tätigkeit der folgenden Gesellschaften enthalten: Generali Asset Management S.p.A. Società di gestione del risparmio, Infranity, Sycomore Asset Management, Aperture Investors LLC (einschließlich Aperture Investors UK Ltd), Plenisfer Investments S.p.A. Società di gestione del risparmio, Lumyna Investments Limited, Sosteneo S. p.A. Società di gestione del risparmio, Generali Real Estate S.p.A. Società di gestione del risparmio, Conning* und unter deren Tochtergesellschaften Global Evolution Asset Management A/S - einschließlich Global Evolution USA, LLC und Global Evolution Fund Management Singapore Pte. Ltd - Octagon Credit Investors, LLC, Pearlmark Real Estate, LLC sowie Generali Investments CEE. *Einschließlich Conning, Inc, Conning Asset Management Limited, Conning Asia Pacific Limited, Conning Investment Products, Inc, Goodwin Capital Advisers, Inc. (zusammen "Conning").