Negative
Positive
Views expressed reflect those of the AXA IM Core CIO team. Traffic lights indicate expected return over a three-to-six-month period relative to long-term trends.
Asset Class Summary Views
Neutral
CIO team views draw on AXA IM Macro Research team and AXA IM investment team views and are not intended as asset allocation advice.
Rates
Short duration still preferred. Long-term yields in trading range.
US Treasuries
Yields in fair value territory.
Euro - Core Govt.
ECB cut interest rates before Fed. Returns to be modest.
Euro - Peripherals
Near-term political uncertainty suggests caution.
UK Gilts
Lower inflation should allow interest rate cuts which will help asset class.
JGBs
Bank of Japan policy indecision and weak yen make JGBs unattractive.
Inflation
Market expects stable inflation over the medium term – five years.
Credit
Income assets should be part of portfolios. Low spreads suggest limited excess returns.
USD Investment Grade
Yields are attractive. Excess return is limited though.
Euro Investment Grade
Supportive macroeconomic environment is helping.
GBP Investment Grade
Returns supported, given current yields and expectations of faster interest rate cuts.
USD High Yield
Fundamentals and funding strength remain strong.
Euro High Yield
ECB interest rates cut supports returns although politics remains a risk.
EM Hard Currency
Volatility has eased but when US interest rates fall it will help recovery.
Equities
Growth supports earnings expansion in 2024. Rates cuts in scope to broaden the rally.
US
Slowing economic growth is unlikely to damage company earnings.
Europe
Positive economic surprises, and attractive valuations but political instability a concern.
UK
Monetary policy and change of government should provide sentiment boost.
Japan
Benefitting from growth in semiconductor industry.
China
Growth remains unbalanced. Accelerating industrial output, masks weak consumption.
Investment Themes*
Secular spending on technology and automation to support relative outperformance.
*AXA Investment Managers has identified six megatrends - which companies are tapping into - that we believe are best placed to navigate the evolving global economy: Technology & Automation, Connected Consumer, Ageing & Lifestyle, Social Prosperity, Energy Transition, Biodiversity.