© Reuters. LGIM underweight equities and credit, protection in long-dated government bonds
The CIO of LGIM, Sonja Laud, believes that the US debt ceiling is a short-term risk, but excludes a default while inflation remains the central theme in the US and Europe. Banking crises weaken the economy
The time has not yet come for investors to reposition themselves on risky assets, both in credit and in equities, better to wait for a better entry point to present itself and in the meantime prefer government bonds with longer maturities for portfolio allocation . It is the indication from the CIO of LGIM, Sonja Laudwho analyzed the macroeconomic context in a webinar and indicated how investors should position their portfolios in the current situation, which sees the‘inflation still as the main driver of the markets, while the hot topic of the roof al US federal debt represents a short-term risk and the credit crunch caused by the US banking crises is helping to push the economy towards recession.
INFLATION COMES BACK BUT NOT THE CORE RATE
Sonja Laud explained that in general inflation is returning, but the core ratewhich excludes the volatile items of energy and food and is particularly watched by central banks, remains very sticky, especially in Europe, where Bank of England e BCE I’m behind the Fed in the action to contrast the increase in prices, also due to wage tensions. This means that inflation is on the way to settling on a ‘plateau’ rather than heading for a steep decline, which does not bring us closer to a phase of interest rate cuts and monetary easing. For which, underlines the expert of LGIMit must be expected that i rates they stay elevated long…
** This article was written by FinanciaLounge