CIO Views : after the recovery, what is the outlook for the economy and the markets?
Most major economies confirmed their recovery during the summer. Driven by an improved global outlook, strong liquidity supply from central banks and the accumulation of excess savings, equity markets are showing exuberant health. Nevertheless, there is a certain heterogeneity in this recovery, reflecting the various public health strategies implemented to fight Covid.
After the restart though, tensions on the productive apparatus and in particular on supply chains are likely to constrain the recovery in some industries. Considering the sharp drop-in interest rates, central banks continue to use their balance sheets to stimulate recovery and avoid anchoring inflation expectations at too low levels. As asset allocation choices must accommodate for the lack of remuneration in interest rate markets, stocks providing healthy inflation protection and high-risk premiums are the default choice...
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