Reviews & outlooks

The forecast-defying strength of the US economy has been one of the key drivers of financial markets in recent quarters, but as economic prospects diverge, Europe is where we see the better relative value in fixed income today.

Are stock markets poised for a good year in 2024? Jean-Louis Nakamura, head of the Convictions Equities Boutique takes a comprehensive look at the various factors that indicate it may well be.

We’ve likely reached peak interest rates as disinflation paves the way for an economic slowdown. The 2024 outlook from our Fixed Income Boutique explains why.

Legendary investor Charlie Munger, who recently passed away, followed a simple philosophy of “soldiering on” – persevering through challenging times while also knowing when to seize opportunities. Munger’s wisdom guides us as we manage key risks and seek to find opportunities in 2024.

Markets surged in early November as the Fed appeared more dovish and the US economy showed signs of cooling. This could turn out to be a false dawn but currently the odds seem favorable for the bulls to maintain control – at least for now. In response, our allocation models are making notable shifts: ceasing equity overweight reduction and establishing a small bond overweight – the first since May.

Consensus expectations are that we could be nearing the end of the rate-hiking cycle. What does this mean for fixed income investors and Global Investment Grade in particular, and how do these typically change at the inflection of rate cycles?

Luc D’hooge and Wouter Van Overfelt review the developments of the Emerging Markets Debt and Emerging Markets Corporate Bond strategies they manage.

October challenged investors with rising yields, robust growth, and ongoing central bank inflation battles. Recession risks grow amidst uneven global recovery, yet China's stabilization offers hope. Allocation models are adjusting, reducing equity overweight and bond underweight, reflecting a gradual normalization of yield curve steepness.

The September Fed meeting was a surprise with its hawkish tilt which went hand in hand with upward GDP forecast revisions and lower recession risks. The question now is whether the Fed's willingness to keep rates 'higher for longer' is a calculated risk in combating inflation or a policy misstep. Our models estimate that a recession may not be immediate but cannot be ruled out, especially for H1 2024. In response, they continue to reduce their equity overweight as well as their bond underweight.

Markets experienced a setback in August 2023 as rate expectations for 2024 and 2025 rose, driven by reduced recession risks and inflation worries from fiscal stimulus and debt. Concerns about contagion from Chinese real estate developers in the banking system seem exaggerated. Our models remain constructive on equities.

For now the much-feared recession has been staved off thanks to a resilient consumer. However, the risk is not off the table yet which has prompted our models to take a small step back from maximum equity allocations. While they stay optimistic, they have now started to treat the asset class with a grain of salt while bonds don’t seem to be able to find their way out of the dog’s house.

Luc D’hooge and Wouter Van Overfelt review the developments of the Vontobel Fund – Emerging Markets Debt and Vontobel Fund – Emerging Markets Corporate Bond and share their forecast for the remainder of 2023.

Nothing seems to be able to derail equities on their way up, despite risk factors such as the US debt ceiling or the surprisingly hawkish Fed communiqué in June. A major reason for the calm is the continuously surprising resilience of the consumer, which still argues for an equity overweight.

Markets keep ignoring the economic deterioration in the US, as first cracks in the US banking system increase the likelihood of a Fed pivot over the upcoming months. At the same time Chinese recovery boosts the growth outlook for the APAC region. While growth perspectives and sentiment seem to diverge, our models stick to their equity overweight.

Wouter Van Overfelt, Head of Emerging Market Corporates and Luc D’hooge, Head of Emerging Markets Bonds, provide a review on the developments in the first quarter, the current positioning of the strategies as well as an outlook for the remainder of 2023.

This month we asked ChatGPT for its investment outlook. Aside from fancy language we didn’t get much out of it. Conversely, our models reveal a continued equity overweight and a slightly more constructive view on bonds as investors hope for Fed pivot.

The tightening cycle has started to bite by taking down three US lenders and sending jitters through the banking sector as a whole. While swift Fed action convinced our models to quickly reject 2007/08 comparisons, a true Fed pivot might be needed to support market sentiment further down the line.

The strong US labor market report has shifted recession risks towards the end of the year. This may have opened the door for a grace period, in which uncertainty around the economic impact of recent policy tightening makes it impossible to refute the arguments of either camp: bulls and bears. This article shows how our models are dealing with this kind of uncertainty.

Luc D’hooge, Head of Emerging Markets Bonds and Wouter Van Overfelt, Head of Emerging Market Corporates, provide a review on the developments in 2022, the current positioning of the strategies as well as an outlook for 2023.

The euphoria in the financial markets has been driven by falling expectations of a severe recession. Although our models continue to indicate a US recession, this is likely to begin later in the year. This means there is no contradiction in the equity overweighting that is currently suggested by our model.

2022 was a stormy year for bonds. As 2023 gets under way, our Fixed Income Boutique heads predict whether bonds are set for a smooth touchdown or a bumpy landing amid the continuing headwinds in the global economy.

High yield markets entered the year at an attractive entry point and investors can enjoy the power of high carry with still solid credit fundamentals. Turning the page on a challenging 2022, the Global High Yield Bond team is hopeful 2023 will be a fortunate year for many things, especially income.

Traditional investment strategies unraveled in 2022 amid geopolitical and energy crises. As 2023 gets under way, these negative trends have started reversing, giving our Corporate Credit team comfort about the prospects for the European investment grade credit market in the months ahead.

Welcome to 2023! At the start of the new year, bonfire rituals across the globe celebrate the time for renewal. Our Global Corporate Bond team have evaluated perspectives for the market by asking themselves the ten most burning questions for the year ahead – and finding the answers.