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Slightly below expectations, this figure benefits from a rebound in investment. Our insight:

30 January 2017

This week was busy with macroeconomic data publications:

In the US, we had Q4 GDP report below expectations at 1.9%, which does not mean the US economy is slowing significantly. This figure was penalized by larger than anticipated trade balance deficit. The good news is that investment picked up, which bodes well for the next quarters. On top of that, PMI came out above expectations, which says basically the same thing: the US are doing fine.

In the UK, Q4 GDP came out better than expected. The economy grew 2.2% in 2016. Nice performance in this Brexit referendum year! Logically, investors have unwound some more short GBP trades, which pushed sterling +1.6% vs USD and EUR this week.

Eurozone economy continues on its improving trend, with this week PMI indices. We had a very solid German manufacturing PMI and good figures as well coming from France. French consumer confidence reached its 2007 high.

  • Regarding bond yields, the move higher extended. Our medium term view remains unchanged, we continue to think German bonds are too expensive.
  • We remain positive on Euro equities, we think investor positioning is on the low end and that EPS growth should help make a good year.

Kind Regards.

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