Noise vs Trend - Our weekly cross-asset views

The markets were nervous again this week with US macro and AI the key themes at the forefront. US macro news flow is not crystal clear at this stage with surprising low retail sales pointing to deceleration vs strong headline NFP (although job creation is mainly concentrated in 2 service sectors). No big news on the AI theme but renewed fears that the “free cash flow” edge of the tech sector is fading, leading to another “AI fear trade Thursday” (NDX -2%) and flight to quality on bonds.Week-to-date and before today’s CPI, US risk assets underperform non-US risk assets, govies bull flatten, UST outperform, US dollar is down 0.5% and commodities remain extremely volatile with another flash sell-off Thursday (gold -3%, silver -11%). EM assets continue to shine (bonds, FX, equities) along with Japanese stocks (Nikkei +5%). Cross-asset volatilities move higher while equity dispersion remains fierce (names/sector/geography). Our Risk Perception Index is up 10 points to 46%, the highest since last November.Higher volatility and higher dispersion do not necessarily mean (negative) trends… US yields are stuck in a rather tight range since Q4 2025, equity indices are now near all-time highs, credit High Yield spreads remain below 300bps and even the US dollar trading range is not large since H2 2025. We view current market tensions as noise rather than a bearish signal at that stage. Portfolio rebalancing towards non-US risk assets (reducing the massive outweigh) is also at play in our view. We still believe that risk assets will perform well, at least until Q3, due to high / accelerating US nominal GDP growth, loose fiscal policy (US tax refunds are on the way!) and Fed rate cuts (we anticipate 3 cuts this year).