While tariffs remain a concern, the key issue is the degree���which we deem moderate���of U.S. recession risk. The current global backdrop makes the U.S. dollar unlikely to strengthen. Earnings growth expectations are modest, valuations are undemanding
In this paper, we assess the potential risks associated with such a strategy by stressing capital requirements using spread-implied ratings.
Themes and implications from the Global Fixed Income, Currency & Commodities Investment Quarterly
Implications for insurance capital requirements
Our view over the past few quarters has been that EURUSD should be rangebound, as the cyclical outperformance of the US economy is offset by the eurozone���s relatively better balance of payments position.
Reaching for yield, which we define as buying bonds with wider spreads after controlling for sector and rating impacts, is a topic that frequently arises in the life insurance industry.
We emerged with a cautious near-term view from our latest quarterly strategy meeting in early September. In our base case scenario, the global economy is expected to narrowly avoid recession and continue to grow, albeit much more slowly.