La Française: Inflation won’t go without affecting growth

La Française: Inflation won’t go without affecting growth

17 juli 2023

Inflatie
Bubble dream droom

It is dangerous to hope that inflation will disappear on its own, without affecting economic growth.

‘The first half of the year surprised all the early-year consensuses, and if the markets teach us anything on an ongoing basis, it is humility,’ La Française AM reports today. ‘We believe it is dangerous to hope that inflation will disappear on its own, without affecting economic growth. For the second half of the year, we are opting for defensive portfolios, with equity exposure below that of the indices and a preference for US equities excluding tech. Japan seems to us to be too consensual and too dangerous in the event of a decision by the Bank of Japan. On the fixed income side, sensitivity is in line, but there is a strong preference for real rates and the long end of the yield curve’.

Unlisted assets closely monitored

‘The real estate sector should be monitored closely. Until now, prices have been resilient, especially given the vast majority of economic agents exposed to fixed-rate loans at a very low cost. However, real estate activity is slowing, especially in Europe (compare PMI – construction in France and Germany) where public spending has not compensated for slowing private investment. The impact of monetary policy tightening appears however weaker than during previous cycles. More generally speaking, unlisted assets should be monitored closely until price adjustments reflect the extent of monetary tightening.’

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