Markets: Play certainties, manage uncertainties - Natixis

Research Team at Natixis notes that the US elections and the "no" at the Italian referendum did not trigger the expected shocks (with the noteworthy exception of EM and gold), as the markets have visibly chosen to focus only on the good news pending future politico-economic developments.

Key Quotes

“It is, ultimately, fundamental trends (inflation, increase in interest rates) that to a large extent have driven investors. This is likely to remain the case over the coming weeks, but we should now expect a higher risk regime. Our risk perception index has entered the intermediate regime after a little more than three months in the low regime.”

“While we remain positive on equities and on corporate High Yield, but we downgrade EM local debt. As for intra-class arbitrages, we have turned positive on Japanese equities and maintained our views on the other regions. The hierarchy of views on sovereign has remained unchanged, with underweighting of USD and GBP. We have, lastly, turned tactically neutral on industrial and precious metals because of the ferocity of their recent move.”