Augusts’ Market Outlook
The lack of cyclical momentum could be offset, in terms of impact on growth, by the “generosity” of most monetary authorities.
Decisions to increase exposure to risk assets more purposefully must be subordinate to further details of the agreements reached at the latest European Council meeting. In particular:
(i) the design of a road map and a timetable for fiscal and financial integration;
(ii) confirmation of a more active role by the European Central Bank (ECB);
(iii) information on the conditions of the bailout plan for the Spanish financial sector; and
(iv) the start-up of the European Stability Mechanism (ESM) in conjunction with the European Financial Stability Facility (EFSF), with a more clearly defined scope of activity.
Diversification is the best defence during the transition towards a context of greater certainty regarding European sovereign debt. We continue to prioritise regions with better growth prospects and assets with more robust domestic fundamentals and that offer yield.
For Augusts’ Market Outlook, please click here.