Growth is weak but monetary policy will remain highly expansionary: What does this mean for asset prices?

After having bounced back sharply after the lockdowns, economic growth in the United States and the euro zone will become weak in 2021-2022 for a number of reasons. At the same time, we know that monetary policy in the United States and the euro zone will remain expansionary for a long time, given the central banks’ new strategy. Asset prices (share prices, real estate prices) are therefore subject to opposing forces: weak growth but a highly expansionary monetary policy. We believe that portfolio rebalancing behaviour (the use of excess money to buy other assets) will prevail, and therefore that asset prices will rise significantly and there will be a decoupling between asset prices and the real economy.