investment insights
Global Investment Strategy Q3 2021: capitalising on reflation
Lombard Odier Private Bank
A robust post-pandemic recovery is unfolding as the second half of 2021 dawns on the world economy. The US economic engine is particularly strong. While this cyclical upswing is raising concerns about inflation, we do not believe it will create long-lasting price pressures. In this context, the Federal Reserve should remain patient until the job market completely recovers before acting to stop the economy from overheating. We now expect the central bank to start tapering asset purchases early next year, and first raise interest rates by mid-2023.
The recovery momentum is also accelerating in Europe. The eurozone is set to see a vigorous rebound over the coming months thanks to strong rates of vaccination across the continent and continued support from the European Central Bank. Its economic recovery is further secured by the upcoming deployment of the “Next Generation EU” fund.
We continue to build the economic recovery into our portfolio positioning by favouring risk assets over interest-rate sensitive assets. In terms of asset-class preferences, we see the most attractive opportunities in cyclical and value stocks, carry strategies, and select alternative asset classes, notably real estate and infrastructure.
To learn more about our key investment convictions and how we invest our clients’ portfolios to benefit from post-pandemic economic reopenings, watch our third-quarter investment outlook video featuring Stéphane Monier, CIO Private Bank and Samy Chaar, Chief Economist.
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