Update

We are currently in a period of consolidation, with equity markets showing no clear direction and rising bond yields. In this environment, central banks remain close to the price evolution and manage their moves in the economic cycle in an orderly fashion. There is no exhilaration on equity markets, however nor do we see advanced signs for a recession, as for example, the inversion of the yield curves of 10 year and 2 year US treasuries.

The volatility in the asset classes comes mainly from geopolitical factors, such as Italy, which still does not have a government, the evolution of the trade war or the rising petrol price due to the USA leaving the nuclear agreement with Iran. We see however that the worldwide economy fares well, with a controlled inflation and that this economic environment stimulates earnings growth of companies. In this configuration we continue to favour quality stocks over bonds.