A look at the markets

Govies sensitivity / Investment Grade* Credit => It's time to gradually come back with an MT horizon of 6-9 months.

A strong sense of uncertainty still lingers in the financial markets as they approach the year's end, but certain events have led us to change our position on risk-free or low credit risk bond assets.

*Investment grade securities are bonds issued by borrowers rated AAA to BBB- by the rating agencies.

The macroeconomic cycle We can confidently state that it is on the growth front that the situation has changed the least. Growth forecasts had been on the decline for many months, and this is precisely what we are observing. The latest PMI¹ figures show that the vast majority of major economies are now below the 50 mark, meaning that activity is shrinking. This is the case in the United States, in the eurozone (especially in Germany) and also in China. Diving into the detail, we see that the latest S&P Global reports show employment indicators correcting, new orders decreasing and pressure on prices also falling.

According to the various leading indicators we follow, the PMIs and other coincidental indicators (ISM² , ZEW³ , IFO⁴ , etc.) should continue to decline in the coming months, which should translate into further reductions in growth forecasts in both Europe and the United States.

¹ Purchasing Manager Index: an indicator of the economic state of a sector.
² Composite index showing the evolution of manufacturing conditions in the United States.
³ This indicator measures the expectations of analysts and institutional investors regarding the development of the German economy.
⁴ The index assesses the business climate in Germany.