Global strategy 2Q 2024

Even if the central banks are currently in no hurry, the first interest rate cuts are increasingly within reach. Furthermore, the future interest rate path is uncertain, which should also lead to increased volatility on the bond markets in the second quarter. We consider 10-year US government bonds to be attractively valued without taking exchange rate risk into account. For corporate bonds, we recommend the BBB rating class and IG-rated subordinated bonds (corporate hybrids). We expect a positive price trend on the global equity markets in the second quarter.
Economy: The US economy has got off to a slower start in 2024. Weaker, but still solid, economic growth is emerging for the first quarter. The decisive factor for this year's GDP growth will be how private consumption develops. Real wage increases on the one hand and the reduction in savings on the other will be important factors. In January and February, US inflation momentum was again higher than before, but we still expect price pressure to ease again in view of the expected slowdown in the economy. In the eurozone, we expect slight growth in 1Q 2024 after stagnation in 4Q 2023. Business sentiment is still at a low level, especially in industry. The still robust labour market and positive real wage growth should provide slightly positive impetus for private consumption. We forecast that inflation will fall to 2.5% this year. However, services inflation in particular will remain the focus of the ECB and the financial markets in the coming months.

Bonds: Inflation has fallen significantly in both the US and the eurozone. However, the US Fed and the ECB want to wait for more data before they are sufficiently convinced that inflation will sustainably return to the target of 2%. Although both central banks have recently held out the prospect of interest rate cuts, they have not been specific. Disappointing inflation data in January and February caused US Treasury yields to rise in 1Q. However, we expect 10-year yields to fall in Q2, mainly due to the expected slowdown in the US economy. German bond yields are being influenced by the US. Interest rate expectations for the eurozone are fairly homogeneous. The first interest rate hike of 25 bp in June should be followed by three more. Accordingly, we expect German 10-year Bund yields to move sideways. Volatility is still to be expected.

Currencies: In addition to the differing economic trends in the USA and the eurozone, the prospect of further falls in inflation rates and interest rates will be decisive for the development of currencies. We expect the euro to strengthen against the US dollar and the Swiss franc to strengthen slightly. Gold should also benefit from falling interest rates.

Equities: Supported by robust expected earnings growth of +7% for this year, we expect the global equity market index to rise in a range of 0% to +5% in the second quarter. We favour the technology, healthcare, industrials and consumer discretionary sectors.

Download the Full Report!