Pictet Asset Management advocate the need for portfolio protection as we edge towards the ECB removing monetary accommodation

The pace and timing of the ECB’s exit from its highly accommodative monetary policies will be a major focus for markets in the coming months. Unless carefully handled, the gradual withdrawal of central bank support is liable to increase anxiety on markets. Our interpretation is that the FX market has started to price in ECB QE tapering to a larger extent than the bond market, which could experience volatility spikes in coming months. Given the robust growth outlook, we remain bullish on European equities, especially domestically-oriented stocks, although we recognise that further EUR strengthening could weight on export-oriented ones. In any case, the risk of increased volatility in markets as central bank support is gradually withdrawn remains consistent with the need to build some degree of protection into our portfolios ahead of policy shifts.

13 Sep 2017 - 16:08- Fixed IncomeEconomic Commentary- Source: Pictet Asset Management

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