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Animal spirits revived as markets start the year

All eyes on Trump and the economy

Publié le 28.01.2025 HNEC

Macroeconomic update for February 2025

About a week into Donald Trump’s presidency, it appears that markets’ animal spirits are still unleashed. While investors are optimistic about expected deregulation, tax and spending cuts, they are also keeping a close eye on interest rates and inflation data. The revelation of China's cost-efficient AI solution has unsettled markets, raising questions about high tech valuations. Superior US economic growth was already expected to broaden gains into non-tech sectors, keeping US equities overall in favor. For now, we maintain our view that monetary policy is likely to remain supportive, with expectations for continued rate cuts this year, the absence of a second wave of inflation, and a labor market that continues to show signs of weakening.  As such, we have a moderate risk-on stance.

Key Takeaways

  1. US equities
    Despite high valuations, the Multi Asset Boutique remains invested in US stocks amid an outperformance of their peers and higher EPS growth forecasts.

  2. Downward path?
    Without a second wave of inflation and an unexpectedly strengthening labor market, the Multi Asset Boutique believes the US Federal Reserve will continue to cut interest rates.

  3. The “4.5%» threshold
    The Multi Asset Boutique is keeping an eye on the risk of higher for longer yields on equities, as yields rising above 4.5% tend to weighon markets.

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Publié le 28.01.2025 HNEC

À PROPOS DES L'AUTEURS

  • Dan Scott

    Dan Scott

    Head of Multi Asset, CIO

    Dan Scott a rejoint Vontobel en 2017. Il est Head of Multi Asset et est au service tant de la clientèle institutionnelle que privée. Avant de rejoindre Vontobel, il a travaillé durant de nombreuses années pour Credit Suisse en tant que Deputy Head of Equity Research ainsi que pour Kepler comme spécialiste en actions suisses. Il a démarré sa carrière vers la fin des années 1990 en tant que journaliste, tout d'abord chez Dow Jones & Company comme reporter pour le Wall Street Journal, Barron’s et DJ Newswires et ensuite comme correspondant à l'antenne pour CNBC.

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