The US inflation has continued to surprise on the upside since the beginning of the year.
This stickiness has put the spotlight back on the uncertainties surrounding the outlook for inflation and rate cuts by the Federal Reserve (Fed), with the market appearing to give increasing consideration to a possible "reverse pivot" by the US central bank. This dynamic is weighing on the markets, but it also highlights the diverging dynamics with the Euro Area, which seems to be embracing the prospects of smooth disinflation, which should allow the European Central Bank (ECB) to initiate a cycle of rate cuts before the Fed, a historic event. Against this backdrop, we are taking a tactically neutral view on equities in a market that should offer attractive entry points at some point, while our strategic stance remains positive. At the same time, the recent rates rise makes duration more relevant in diversified portfolios, while we maintain a tactically positive view on the US dollar.

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