• This year has started just as last year ended, with strong momentum in equity markets. In the first quarter, global equities delivered a total return of just over 9% in euro terms, a little over 6% in local currency terms. The strength of the global economy, earnings, roll out of vaccinations and further fiscal support were the principal drivers.• It was a troubled quarter for fixed income markets, in particular sovereign debt. Euro area corporate credit did perform better with a return of -0.6% against the broad bond market return of -1.9%. The low starting yield, larger stimulus plans and inflation concerns undermined the bond markets but the price action was quite orderly. But central banks do not share the bond markets concerns. From the Fed minutes released last week the members are making it clear that the Fed is going to be re-active rather than pre-emptive. • The second quarter is unlikely to be as strong as the first – there is likely to be a bit of ‘travel and arrival’ as we see the impact of reopening – but profit growth is turning out to be very strong, bringing multiples down very quickly and hence we still favour equity markets. Moves in bond yields have been quite orderly and as a result the benefit of the higher economic growth more than offsets the valuation impact of higher bond yields.

Ver todos los episodios