Monthly House Views - A summer forecast with sunny spells

Resilience in the face of policy volatility

The first half of 2025 was marked by high volatility in economic and international policies: i) the disengagement of the United States from European security, accompanied by the recovery and armament plans announced by European governments; (ii) the increase in US tariffs, with uncertainty as to their final level; iii) the adoption of a US budget prolonging the tax cut, while maintaining significant deficits; and (iv) the Iran-Israel conflict, resulting in a temporary increase in oil prices. Despite these events, growth in major economies remains resilient. In the United States, trade policy and economic uncertainties are leading to a gradual slowdown, particularly in consumption. However, the labour market remains buoyant and corporate profits are showing a positive trend. In Europe, the cyclical recovery continues, with a gradual improvement in the German economy, while stimulus packages are expected to strengthen this momentum in 2026. In China, economic activity also remains robust, supported by a fiscal support plan and exports that are still very dynamic, despite protectionist policies

Overweight on equity markets and on underweight bond markets

This macroeconomic resilience encourages us to increase our allocation to equity markets to Overweight, while reducing our exposure to bond markets. The strong market performance since Liberation Day, the favourable earnings outlook in the new technology sector, as well as the combination of supportive policies and a cyclical recovery in Europe, are pushing us to increase our exposure to US equities and maintain our overweight in European equities. On the other hand, expectations of a significantly increased supply of sovereign bonds on both sides of the Atlantic should put upward pressure on sovereign yields, leading us to further reduce our exposure to this asset class, which we place at very underweight.

A strategic position that is always balanced

Our strategic schedule remains balanced. We maintain an overweight position on Investment Grade (IG) and High Yield (HY) credit, which benefit from attractive carry and limited duration risk. We also continue to gain exposure to gold and to maintain hedges against a possible depreciation of the dollar.
 

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