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Monthly Investment Outlook

O​ur investment outlook for May is now available. It contains an overview of our views on various asset classes, macroeconomic analysis for the US, UK and the Eurozone, as well as a range of high conviction investment ideas in equities and fixed income.

From a macroeconomic perspective:

• The US: Ready to hike rates in June
  ​Economic weakness in the first quarter should be temporary and investors are focused on company earnings results and political developments on the other side of the Atlantic. The Federal Reserve reiterated its tightening intentions at its meeting in May, describing the slowdown in Q1 as “likely to be transitory”. Markets are now fully anticipating the next rate hike to take place in June.
• The UK: Mixed signals
  ​The UK economy continues to send mixed signals, with soft and hard indicators pointing in different directions. Weakness in retail sales due to higher inflation and at the same time stronger manufacturing activity, due to a weaker currency leave equity and bond investors in limbo. With the Bank of England’s decision to tolerate higher levels of inflation to support the economy, and general elections approaching quickly, we expect the BoE to keep rates on hold at its next meeting on 11 May.
• The Eurozone: Strength in recovery
  ​Overall, the economic recovery is becoming increasingly solid in the euro area, with an improvement in both, hard and soft indicators. The European Central Bank has confirmed the positive economic outlook, stating that euro area growth is moving towards “a more balanced configuration”–opening the door to a possible change in the ECB’s forward guidance at the next meeting in June.