Monthly House Views -A summer ending on different speeds - September 2023

Economic trends differ. In the United States the economy remains on the particularly strong path it has enjoyed since its exit from Covid. The outlook is for a modest slowdown in activity, with households benefiting from a healthy labour market and falling inflation. Leading indicators for the Euro area and the United Kingdom look less rosy. Purchasing power will continue to be restrained by past inflation, while economic policies - both monetary and fiscal - are likely to weight on the growth outlook. China’s post Covid recovery remains subdued, hampered by persistent problems in its real estate sector.

Inflation is still falling. The shocks that triggered the global price surge have recently receded and inflation continues to come down. Ripples could persist in the economy for some time yet, but the real hard pressure looks to be behind us. With central banks now nearing the end of their tightening cycle, interest rates are probably nearing their peak. That said, central banks are likely to stick at current levels until they can be sure the ripple effects are fading.

Balancing equities and bonds, while tweaking regional exposure. We are standing by our highly diverse global positioning, which has allowed us to catch the rally in equities since the start of the year, while retaining some protection against any fresh turbulence. In equities, we are now favoring the US market which stands to gain from its strong revenue growth outlook. We move to Neutral on European markets and remain Underweight emerging markets given their weaker economic conditions.

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