House View, July 2019

Pictet Wealth Management's latest positioning across asset classes and investment themes.

Asset allocation

Although the US-China ‘trade truce’ and dovish central banks are giving a short-term fillip to equities, our analysis suggests that expansion of valuations from here is limited, making us globally cautious on equities. But we see opportunities in high-quality stocks in individual sectors

We remain underweight government bonds given low yields, except US Treasuries, on which we are neutral. We have moved from an underweight to neutral stance on euro high yield in recognition of ECB support, including a possible resumption of bond buying.

A resilient US economy, low inflation, limited downward pressure on the dollar and a lessening of trade tensions after the G20 summit mean we are neutral on gold after its recent strong run-up.


Given a looming surge in US oil exports, we have revised down our central year-end forecast for oil prices to USD65 per barrel for Brent. However, we believe geopolitical tensions could trigger temporary price spikes toward USD70-80.


The US dollar index wavered in June, reflecting the prospect of Fed rate cuts. Reduced support from interest rates point to further, limited dollar weakness ahead. We believe the dollar could trade in a range of USD1.11-1.15 per euro for the rest of this year.


After a strong rally in June that more than erased the May drawdown, valuations look demanding, underpinning our underweight stance. We expect equities to perform sideways in the coming weeks, but with the possibility of rotation to quality cyclicals.

 Emerging-market (EM) equities had a good June, although performance was driven more by renewed hopes on trade than fundamentals. But a real improvement in global conditions will be needed to see a significant rebound in the subdued earnings expectations for EM equities.

Some defensive sectors are beginning to look expensive. By contrast, quality industrials could be worth revisiting, with European capital goods stocks continuing to generate superior earnings growth.


In the booming private equity market, entry price, interest rates, leverage and dry powder are all relevant parameters. But human capital (team skills) and active ownership are now more than ever the main drivers of private assets’ long-term performance.

Fixed income

We remain underweight core euro sovereign bonds, as renewed ECB easing means yields could stay in negative territory. We also remain underweight peripheral bonds given concerns about Italy’s debt sustainability.

We expect euro credit to perform well in the coming months as a result of ECB policy moves. Already neutral on euro investment-grade credits, we have now moved from underweight to neutral on euro high yield.

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