US: Fundamentals vs political noise - Natixis

Analysts at Natixis explain that as expected by them, February was a time to play macroeconomic fundamentals, in particular in equities and credit while the bond market was an exception: despite the news flow pointing towards a higher inflation regime in both the United States and Europe, this market remained underpinned by the “French political risk” factor, which shaped the month.

Key Quotes

“March will be host to more major events: meetings of the FOMC on the 15th (likely to be capped by a decision to raise the Fed Funds rate) and the ECB on the 9th, in addition to general elections in the Netherlands (which will continue to fuel fears over the eurozone’s political stability).”

“In this context, we reinforce our negative bias on sovereign bonds likely to be driven by the US market and the acceleration of Fed tightening (we expect 4 hikes this year) and neutral on credit. Amid the reflation trade, we continue to overweight equities (with preference for US and EM) and linkers.”