Global equities had their best quarter since 1998 in Q2 and started Q3 on a positive note. Markets could be choppier during summer, as valuations are rich in some leading sectors, seasonal liquidity is lower and many sources of risks remain: the spike in virus cases is forcing a number of US states to reverse the easing of lockdowns, a number of European countries
\nare also seeing a rise in cases, Q2 reporting season will kick-off soon and the US Presidential election is set to become a significant source of uncertainty. Yet, many of these risks are mostly
\nknown to investors and the growth-policy tradeoff remains supportive of equities. Inflation may
\ncontinue to be a topic of discussion but the lower for longer yield expectation is well anchored.<\/p>\n
Despite the strong rebound in activity data, bond yields remain stubbornly low and seem to
\nconvey a much more cautious message than the bullish equity market. The \u2018Fed put\u2019 is perhaps
\nmisleading but it provides a safety net to equities \u2013 it has so far kept investors in fixed income
\nand \u2018safer\u2019 bond-like parts of the equity market. Financial innovation contributed to the rally in
\nshares since mid-March and cyclicals such as Banks rebounded too, but not as much as
\nimplied by surging PMIs. In short, rising yields appear to be the missing link to confirm the
\nnascent reflation trade. The bottom line here is that if the US government requires substantial
\ndeficit finance, the Federal Reserve has the obligation to help finance the spending.<\/p>\n
Ultimately, we could see things return to normal with a vaccine in spring 2021, but having gone
\nthrough this virus, and a potential second wave in fall 2020, tastes and preferences will likely
\nchange for good towards working from home, e-commerce, e-services, mobile banking and
\nother tech enabled disruption. <\/p>\n","protected":false},"excerpt":{"rendered":"
Global equities had their best quarter since 1998 in Q2 and started Q3 on a positive note. Markets could be choppier during summer, as valuations are rich in some leading sectors, seasonal liquidity is lower and many sources of risks remain…<\/p>\n","protected":false},"author":1,"featured_media":96458,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1480],"tags":[1663,1809,1655,1651,1437,2087,2068],"_links":{"self":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/96460"}],"collection":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/comments?post=96460"}],"version-history":[{"count":0,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/96460\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media\/96458"}],"wp:attachment":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media?parent=96460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/categories?post=96460"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/tags?post=96460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}