Latest from Lyxor
16 Dec 2019: A momentous week
It’s been a busy week, with the Conservatives securing a solid majority in the UK general election, the US and China reaching a trade deal and dovish monetary policy meetings in the US and euro area. Risk assets performed well over the week. In the US, bond yields rebounded sharply from their FOMC lows on reports that the US could suspend some of the tariffs due to be implemented on Chinese imports. Fed Chair Powell raised the bar for a rate hike by declaring that a significant, persistent increase in inflation is needed for rates to be increased. The ECB stated that downside risks have fallen since the summer, while upwards Q3 GDP revisions, consumer confidence readings and the Tankan survey provided encouragement in Japan.
Next week could see another US government shutdown on Friday unless Congress approves spending measures to keep the government operating until 1 October 2020 or a stopgap measure is agreed. In Europe, the focus will be on activity and confidence surveys. The preliminary release of December PMIs will provide an important indication of activity in the months ahead and whether a bottom has been reached, with the markets looking for signs of a pick-up in activity. In Asia, the Bank of Japan is likely to keep policy on hold next week with fiscal stimulus taking on a bigger role in supporting the economy.
Latest performance
Source: Lyxor International Asset Management. Figures reported in local currency terms. Past performance is no guide to future returns. Data as at
Our key calls
Week commencing 15/01/2019
Take a cautious approach to US equities
We anticipate a moderate slowdown in US activity in 2020, but no recession. On this basis, we maintain a neutral overall stance to US equities. We prefer minimum-variance strategies, which provide exposure to the asset class but with a marked reduction in volatility and lower concentration risks relative to more mainstream US equity benchmarks.
German equities ready for lift-off
A cyclical upturn looks to be on the cards in Europe, supported by factors such as an easing of trade tensions and fiscal and monetary accommodation. In particular, we expect a rebound in Germany and, to a lesser extent, Italy.
Still long Japan
We maintain our positive long-term view on Japanese equities. A fall in the correlation between Japanese equities and the yen suggests that a mild rise in the value of the yen should be manageable. The market also provides useful diversification benefits to Europe- or US-heavy portfolios.
Things we are watching out for
The Main Event
Lyxor strategists on the key moments in the week ahead
Coming soon...
Other major events
4 more things to put in the diary
23 Jan
29
Jan
30
Jan
BoE MPC meeting (with report)
31
Jan
BoE Carney mandate ends
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These are the views, opinions and recommendations of Lyxor International Asset Management (“LIAM”) Cross Asset and ETF research analysts and/or strategists as at 15 January 2019. To the extent that this research contains trade ideas based on macro views of economic market conditions or relative value, it may differ from the fundamental Cross Asset and ETF Research opinions and recommendations contained in Cross Asset and ETF Research sector or company research reports and from the views and opinions of other departments of LIAM and its affiliates. Lyxor Cross Asset and ETF research analysts and/ or strategists routinely consult with LIAM sales and portfolio management personnel regarding market information including, but not limited to, pricing, spread levels and trading activity of ETFs tracking equity, fixed income and commodity indices. Trading desks may trade, or have traded, as principal on the basis of the research analyst(s) views and reports. Lyxor has mandatory research policies and procedures that are reasonably designed to ensure that purported facts in research reports are based on reliable information and (ii) to prevent improper selective or tiered dissemination of research reports. In addition, research analysts receive compensation based, in part, on the quality and accuracy of their analysis, client feedback, competitive factors and LIAM’s total revenues including revenues from management fees and investment advisory fees and distribution fees. Click here for more.
These are the views, opinions and recommendations of Lyxor International Asset Management (“LIAM”) Cross Asset and ETF research analysts and/or strategists. To the extent that this research contains trade ideas based on macro views of economic market conditions or relative value, it may differ from the fundamental Cross Asset and ETF Research opinions and recommendations contained in Cross Asset and ETF Research sector or company research reports and from the views and opinions of other departments of LIAM and its affiliates. Lyxor Cross Asset and ETF research analysts and/ or strategists routinely consult with LIAM sales and portfolio management personnel regarding market information including, but not limited to, pricing, spread levels and trading activity of ETFs tracking equity, fixed income and commodity indices. Trading desks may trade, or have traded, as principal on the basis of the research analyst(s) views and reports. Lyxor has mandatory research policies and procedures that are reasonably designed to ensure that purported facts in research reports are based on reliable information and (ii) to prevent improper selective or tiered dissemination of research reports. In addition, research analysts receive compensation based, in part, on the quality and accuracy of their analysis, client feedback, competitive factors and LIAM’s total revenues including revenues from management fees and investment advisory fees and distribution fees. Click here for more.
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