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Monthly Investment Outlook

Monthly Investment Outlook

We publish a Monthly Investment Outlook that highlights our convictions on equities and bonds, as well as recent asset allocation changes.


  • MONTHLY INVESTMENT OUTLOOK - Starting to price an economic slowdown
  • GLOBAL TACTICAL ASSET ALLOCATION - Focus on increasing quality with active risk management
  • UBP ECONOMIC OUTLOOK - Desynchronised slowdown
  • UBP ECONOMIC OUTLOOK - Eurozone VS US: how far from a recession are they?
  • GLOBAL BONDS - Preference for hedge funds and investment grade credit
  • GLOBAL EQUITIES - Downside risks building to earnings expectations
  • RECENT CHANGES - Seeking to add more asymetry against rising recession risk
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  • May provided a reprieve for investors as a late-month rally in both equities and bonds recouped much of the losses seen early in the month.
  • Economic surprises in the US began to miss consensus expectations in May with a sharp fall in the Citi Economic Surprise Index in the month highlighting the softening in growth momentum developing in the economy.
  • Though recession in the US remains a risk scenario given the ongoing strength of the US consumer, softening US industrial data and tight financial conditions raise the threat of US recession. This adds to more pronounced recession concerns for both China and Europe.
  • With global growth concerns building, the April-May declines in equity markets and widening spreads in credit markets have made partial progress in pricing the economic slowdown in progress.
  • While these concerns have eased pressure on US 10-year yields, they have increased upward pressure on credit spreads in recent months. Indeed, while investment grade credit spreads have priced soft-landing prospects for the US economy well, high yield credit spreads remain short of pricing even a soft landing, suggesting an unattractive risk-reward profile for credit investors looking ahead.
  • The late-May rally in equity markets has provided some respite to weary investors following the year-to-date equity sell-off. However, this rally – though sharp and swift – is consistent with bear market rallies seen since the 1950s.
  • Indeed, the current bear market rally neared the depth seen in previous, recession-less bear markets. However, those market declines ended with the Fed pausing or even reversing its tightening cycle, a prospect we do not expect to be likely moving into the summer.
  • As a result, the current bear market rally offers investors an opportunity to recalibrate exposure in light of the deteriorating economic backdrop.
  • In particular, to price the ongoing economic slowdown more fully, investors should expect not only further P/E contraction in the months ahead, but also the likelihood that earnings expectations – which have remained firm all year – will begin to see downgrades moving into year-end.
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Investment Outlook 2021

A Brave New World


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