Bond yields now more appealing
Geopolitical risks, inflation and hawkish central banks translate into a cautious stance on risk assets such as credit, in which, a deceleration in growth (and its impact on earnings) could create concerns over cash flows and liquidity, especially for the lower rated companies. Hence, we prefer US IG and are defensive on HY. On the other hand, USTs are attractive at current levels, but investors should stay active and also explore select opportunities in euro area curves. In equities, we favour US over Europe and selectively like quality, value names that can sustain earnings and reward shareholders even in a downturn.