Equities have remained buoyant over the past weeks despite some challenges (China regulation, Afghanistan crisis), primarily due to the exceptional earnings seasons in the US and Europe.

The past weeks have confirmed that phase one of the ‘great recovery’ is now behind us. We have entered a new sequence: PMIs decelerating from their peaks and concerns about the spread of the Delta Covid19 variant are features of it.

EMU-10 EGB net issuance, net of ECB QE purchases, is likely to be negative in H2 this year for three main reasons: 1) front loading of sovereign debt supply in H1, 2) roughly 60% of yearly bond redemptions still to come, and 3) ECB QE purchases to remain steadily high. The supranational debt market will keep growing remarkably, driven by NGEU EU funding, following SURE bond issues in H1, with the ECB likely to keep playing a supportive role in this segment, too.

Central banks have put in place ultra-accommodative monetary policiesto support economies during the Covid crisis.

The monetary policy conditions in the emerging markets are still definitely dovish.

We are already reaching the peak of economic acceleration. What matters going forward is what will be left of this bounce in growth and inflation.

Speculative grade bonds have been among the major beneficiaries of the rapid turn of both Fed and ECB monetary policy stances to much more dovish positions.

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