Cross Asset Investment Strategy - March 2024

6 questions concerning the weakness behind US resiliency

• The US economy is showing signs of deceleration, with falling profit margins and a decline in the leading economic index suggesting a potential slowdown in the coming quarters.
• Rising delinquency rates on credit card and auto loans signal increased financial stress, especially among younger and lower-income households.
• Restrictive monetary policy and high mortgage rates are contributing to low housing market activity and this trend should also continue in 2024.

• Macroeconomic focus: European PMIs recovering, but manufacturing / services dichotomy persists
• Emerging markets: China & India
• Macroeconomic snapshot
• Central banks watch: DM Central Banks are lagging behind their EM peers on the easing cycle
• Geopolitics: The Middle East faces an uncertain future
• Policy: EU: back to the ‘guns versus butter’ trade-off
• Scenarios and risks 
• Amundi Investment Institute models: Nelson-Siegel yield curve fair value model – focus and update on 10Y rates path for 2024
• Equities in charts
• Bonds in charts
• Commodities
• Currencies

Markets, economy and valuations: debate rages on

The strength of economic activity, and the market’s expectations of central bank policies and corporate earnings, have been driving asset prices. Valuations are excessive in some segments such as mega caps where profit margins are also high. But the key question is whether these high margins justify current valuations? And will these companies be able to grow their top line quickly, while maintaining margins in a context of increased global competition and exhausted consumers? On the other hand, judging the direction of the economy is becoming increasingly difficult.

March 2024