investment insights
Global Investment Strategy Q2 2021: the recovery strengthens
Lombard Odier Private Bank
An already strong economic recovery is shaping up to be even stronger.
Sustained fiscal stimulus, accommodative monetary policies and vaccination programmes are all boosting the momentum. Nowhere is this more evident than in the US, where growth is set to accelerate further thanks to the 1.9 trn USD American Rescue Plan.
The ambitious fiscal policies of the Biden administration and Fed’s tolerance for temporary overheating give investors a clear two-year window for US growth.
The situation is different in other parts of the world. The third pandemic wave in Europe has put pressure on governments and the European Central Bank, and the road to complete economic recovery there will be longer. Meanwhile, China’s already taken the first steps on the path to monetary and fiscal policy normalisation.
Globally, confidence in the recovery is growing, and the markets are pricing-in the post-pandemic economy. Inflation is showing signs of normalising and bond yields are rising. But this should not threaten equity markets. Rising yields are a normal part of the recovery as long as there is no unexpected tightening of financial conditions that could damage the economic healing.
We have been investing in the recovery since last autumn. We favour European, UK and emerging market stocks and have reduced our holdings of government bonds and gold. In periods of rising yields, investors need to be very selective when it comes to their regional, sector and style allocations.
Discover our latest views and how we manage portfolios to benefit from the recovery in our Q2 2021 global investment outlook video featuring Stéphane Monier, CIO Private Bank and Samy Chaar, Chief Economist.
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