Investment outlooks place a lot of emphasis on US President Donald Trump’s administration and the sharp reductions in European growth that could result from a combination of his tariff policies, economic challenges in Germany and political dysfunction in France.
Strong views on the actual trajectory of US fiscal and trade policies are hostages to fortune and confidence is difficult to justify, but the market seems both happy that the new government's package will be supportive for growth and relatively unconcerned about the impacts of tariffs on domestic growth. The risk to the consensus view is to the downside, as the touted tariff package could be several times larger than that of Trump's last term of office. We think this supports a constructive view on US duration and an underweight position in US credit, where spreads at similar tights h...
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