Europe

Positioning and fixed income markets have remained quite tricky this year, however credit markets have continued to perform very strongly. TwentyFour Asset Management's Eoin Walsh, discusses why he thinks there is opportunity within European credit despite the rate headwinds and pull back on some of the aggressive rate cutting expectations markets had at the start of the year.

Last month saw the European Central Bank (ECB) get their cutting cycle underway with a 25bp cut in the deposit rate to 3.75%. However, any expectations for a rapid series of reductions after the first move were tempered by President Christine Lagarde, who at the subsequent press conference was clear that the ECB could move in phases in which they left interest rates unchanged.

After weeks of volatility following President Emmanuel Macron’s decision to call snap parliamentary elections in France, markets were breathing a sigh of cautious relief on Monday after the far-right Rassemblement National (RN) underperformed the polls.

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.

For the fixed income fanatics amongst us, June was always going to be one for the books with all three of the major central banks meeting, elections, and continued data.

The European Central Bank (ECB) will almost certainly start their rates cutting cycle next month. Supportive inflation data and clear guidance from the governing council has driven market implied probabilities of a June cut to almost 100%, with little in the way to derail that.

The first four months of this year have seen €11.6bn in gross Additional Tier 1 (AT1) issuance from European banks, across euros, dollars and sterling markets.

Many US investors are overweight domestic versus international strategies for the wrong reasons – home bias and benchmark anchoring. In our view, investors should focus on great companies, regardless of where they are domiciled. An active international strategy can help US investors expand their opportunity set, diversify risks, and improve their portfolio returns.

Almost a year ago to the day, we were in the midst of banking sector turmoil, which started off with regional banks in the US and spilled over to Europe, eventually culminating in the forced merger between Swiss banks UBS and Credit Suisse.  

We believe answers to critical questions about weight loss drugs will help determine the sustainability of success that some pharmaceutical stocks have enjoyed: How many people will be on the drug, and at what price? Which pharma company will be the winner of the R&D race?

After some troubled years, bonds are back. In a big way. Our team explains the reasons why we believe bonds are poised to be one of the most attractive risk/reward propositions of the coming year.

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.