Asset Allocation

On April 13, Iran decided to strike Israel with 300 drones and missiles following an attack on its diplomatic compound in Syria. Regional escalation and oil price are at risk. This tail risk cannot be ignored. We are closely monitoring the unfolding situation.

Japanese equities have enjoyed a positive run since the start of the year (+20.8% performance to 27 Mar 2024 ), with the Nikkei recently hitting all-time highs, surpassing the peak of the 1989 bubble .

The transatlantic debate on central banks’ monetary policy has evolved to being just a question of timing and magnitude as the odds remain undoubtedly in favour of a soft landing.

The US market rally since October is exceptional compared to historical observations. Only once in the last 50 years, in 1989, has the S&P 500 Index risen in 15 of the last 17 weeks.

The global outlook for 2024 is complex, marked by the dual forces of economic resilience and evolving challenges. In the United States, robust growth throughout 2023, culminating in a 3.3% annualised expansion rate in Q4, sets a compelling precedent.

2022 was a landmark year for monetary policy, with Central banks shifting priority from supporting growth to taming inflation.

Following the strong rebound in financial markets in November and December of 2023, the assets most closely correlated with interest rates have partially retraced their exceptional end-of-year performance.

As financial assets performed particularly well in the final part of last year, our portfolios are now positioned to weather a consolidation phase.

We acknowledge that several tail risks have receded over the past few weeks, bringing relief to financial markets.

Our asset allocation has turned more cautious as several risks have started to materialise.

It's back-to-school time, and time for investment decisions... Will the US fall into recession?

One and a half years after the US Federal Reserve bank began its tightening course, the US economy continues...

Ever wondered what to do with your portfolio allocation: leave it untouched through market ups and downs, or rebalance? When precisely? What’s the right balance? Our Quant research team has laid out the facts clearly for you in this study.

The markets appear to be having second thoughts on the “terminal rate” of several central banks in developed markets, as their restrictive job is likely not finished yet.

As we reach the halfway point of the year, it seems that recession may be avoided on both sides of the Atlantic, but growth forecasts remain weak...

Financial markets have been resilient in H1 2023, reflecting a better growth/inflation mix than expected by consensus at the start of the year.

In our economic and market scenarios, the next stage points to lower growth and gradually lower inflation in the US by the end of 2024. Consequently, lower interest rates should follow, and we keep a long duration bias in fixed income.

With the upcoming 2023 Turkish presidential election, scheduled to take place on 14 May, we are sharing our views and sentiments on the possible outcomes and their consequences.

Our main scenario incorporates slow growth, both in the US and eurozone, and continues to remain the most likely.

The once-in-a-generation monetary tightening engineered by the US Federal Reserve (Fed) over the past twelve months has produced financial vulnerabilities.

Uncertainties on US and European financials have replaced the better economic growth outlook in investor’s minds. Suddenly, the improvement in activity is now mitigated by financial vulnerabilities and inflation stickiness.

Portfolios managed by Candriam have no exposure to any Credit Suisse security, OTC exposure or stock-lending exposure.

The better outlook on the growth/inflation mix for the year ahead has quickly been incorporated by risky assets, from equities to high yield via credit markets. As the extreme investor pessimism of last October is now in the distant past, we are reducing our overall equity allocation to a more neutral stance.

We have started 2023 with a preference for equities over bonds, as our investment strategy turned more constructive on attractive price levels in October.

We end 2022 with a preference for equities over bonds, as our investment strategy became more constructive on attractive price levels at the start of the fourth quarter.