Market Scenarios and Risks - June 2021

Wednesday 02 June 2021

We maintain the narrative and probabilities of our central and alternative scenarios. In our central scenario, equities outperform on the back of abundant liquidity, improving fundamentals and accommodative monetary policy.

Vaccine-resistant virus variants, hawkish policy surprises and geopolitical tensions are the main sources of risks. Beyond 18 months, we expect (US) growth to revert to potential amid a higher inflation regime while stagflationary pressures rise across Europe. As risky assets valuations are stretch, we believe there are narrower margins for a policy mistake or adverse events.

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CENTRAL & ALTERNATIVE SCENARIOS (12 TO 18 MONTHS HORIZON)

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