A sweet spot, but keep a sharp eye on the macro side

Risky assets have been in a very strong uptrend since the beginning of the year. The key question now is, where do we go from here? There are two main driving forces to focus on in the current context.

Force 1 is the dovish turn of the main Central Banks (CBs) – the game changer this year. The Fed hiking cycle seems to be over for the moment, with the probability of further hikes now very remote. The ECB has gone the extra mile of dovishness by confirming that the “lower for longer” narrative is going to persist, announcing a new TLTRO, and also introducing the possibility of further accommodative measures.