The Market Downturn Is an Opportunity to Rebalance Portfolios: Strategic Outlook, Safe-Haven Assets, and “Cheap” Equities

In a week marked by the release of macro data—including the first-quarter GDP in the U.S.—and the completion of the first 100 days of the Trump Administration, the keyword is confidence. According to international firms in the sector, markets will look for signs and proof of long-term stabilization, such as trade agreements or the action of central banks, to regain confidence. On that path, investors must be prepared to identify opportunities, but also to seek safe-haven assets, as volatility is expected to remain high.

For Benoit Anne, Senior Managing Director of the Strategy and Insights Group at MFS Investment Management, the starting point of all this uncertainty and volatility has been a crisis of credibility in economic policies. “Policy credibility is important and no country is above this basic market law. Apparently, not even the United States. In our view, the most concerning signal seems to come from the U.S. bond market. Although the deterioration of macroeconomic fundamentals should, in principle, have pushed bond yields down, what is happening now is the opposite. In the face of increased risk aversion, U.S. bonds currently do not appear to offer the protection they once did, leading to upward pressure on yields. To be clear, it is still too early to know whether this confidence shock will persist for a long time. Given the extreme level of uncertainty, we believe the market backdrop may change radically in a relatively short time,” acknowledges Anne.

https://www.fundssociety.com/en/news/markets/the-market-downturn-is-an-opportunity-to-rebalance-portfolios-strategic-outlook-safe-haven-assets-and-cheap-equities/