Our central scenario of a soft landing for the economy is still holding strong. Inflation no longer appears uncontrollable, and the risks of recession are receding. All the ingredients are therefore in place for a relatively calm last quarter of 2024. Central banks are expected to continue lowering rates in line with the September meetings. In the meantime, short-term rates remain close to their peaks and are still significantly higher than long-term rates.

Our strategy

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While waiting for the next rate cuts, short maturities still offer a high yield.
  • In light of significant expectations of reductions in key interest rates, caution is warranted regarding interest rate risk; therefore, we favor variable rate instruments.
  • Political developments have been intense in recent weeks, particularly in France, but the concerns observed over long-term debt have not spread to the short-term and money markets: there is no reason to underweight France at this stage.
  • Certain sectors, such as the automotive industry, have shown signs of weakness (several profit warnings have been announced recently): issuer selection will remain a key factor when integrating assets into our portfolios in the coming weeks.
  • Winter is approaching and the end of the year is near. The last quarter is synonymous with uncertainty for investors regarding their cash flow needs. We are maintaining significant liquidity and a buffer of short-term maturities, which have the added benefit of being particularly rewarding in this context of an inverted yield curve.