The research team at Standard Chartered explains that the Euro area assets remain a geographical conviction for them and they are now bullish on the EUR in addition to their existing preference for Euro area equities and Developed Market High Yield (HY) bonds (which include Euro area HY bonds).
“This is consistent with our view that evidence of stronger growth and modestly higher inflation is broadening in Europe. Our preference for Asia ex-Japan equities remains unchanged.”
“We continue to watch geopolitical risks closely. A largely expected outcome in the first round of the French presidential elections reinforces our view that elections are unlikely to cause lasting market weaknesses in 2017. North Korea poses greater uncertainty, but tensions there have historically weakened markets only temporarily.”
“US Treasury yields are now near key technical levels. We continue to view the yield pullback as temporary and believe it is an opportunity to prepare for higher yields. In this context, we continue to like senior floating rate loans and US and Euro area HY bonds.”