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Adjusting our asset allocation
Published on 29.04.2024 CEST
Macroeconomic update for May 2024
We anticipate that economic momentum could pick up in the coming months, potentially sparking a modest "late-stage mini cycle”. Furthermore, we expect the US Federal Reserve to cut interest rates later than initially projected, but more than what is currently priced in by markets. Geopolitical risks have also been on the rise.
Against this backdrop, we have made adjustments to our asset allocation. In this video, our Multi Asset experts explain the details and the reasons behind these changes.
Key Takeaways
- Stock market consolidation not as surprising as one might think
After almost five consecutive months of stellar performance, equity markets entered a broad-based consolidation phase at the end of March. Is this the beginning of a stronger correction? We don’t think so. - Threat of significant second inflationary wave?
Three consecutive stronger-than-expected monthly prints for US consumer inflation, along with the escalation of geopolitical conflicts, were enough to rekindle inflation concerns. We don’t see strong risks of a second wave of inflation. - We see equities as the place to be; fixed income downgraded, commodities upgraded
Our current macroeconomic scenario of slightly higher growth favors “cyclical” asset classes like equities and commodities more than the fixed income segment. The sharp tightening of credit spreads has considerably reduced the margin for safety in credit. We remain overweight on equities.
About the author
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Dan Scott
Dan Scott has been the head of Vontobel Wealth Management’s Investment Office and Deputy Chief Investment Officer since the end of 2017. Dan joined Vontobel from Credit Suisse where he held various positions as a financial analyst including deputy head of equity research as well as thematic research analyst. As an on-air presenter for CNBC and as a regular contributor to the Wall Street Journal, Dan also has extensive experience in business journalism.