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Latest from Lyxor

Latest from Lyxor

12 Nov ‘18: Moving beyond the mid-terms

US equities rallied last week but results were more mixed elsewhere as growth momentum weakened in Europe and China.

Markets welcomed the mid-term election results, with a split Congress likely to be a recipe for legislative gridlock. Tax cuts and deregulation measures should now endure which, in turn, provides good visibility for businesses. Of course, it also makes it much harder for Trump’s administration to push through any further fiscal stimulus before 2020. Sentiment soon softened though as data from China disappointed and the Fed reiterated its hawkish stance. Crude oil prices dropped further and entered a bear market.

Up next? Things look reasonably rosy for now, particularly in the US, but investors are on the lookout for signs of slower growth and bracing themselves for trickier conditions next year. We still favour equities, but won’t hesitate to cut risk should the train start to derail.


Source: Lyxor International Asset Management. Figures reported in local currency terms. Past performance is no guide to future returns. Data as at

Our key calls

Week commencing 12/11/2018

Enjoy the US bounce while it lasts

The split Congress won’t have a material impact on the policy path and rates, but it will all but extinguish hopes for further fiscal stimulus. Potential governmental gridlock will force markets to reassess the outlook for growth in time. For now though, a buoyant job market, more capex spending and strong earnings have us overweight US equities


Lyxor S&P 500

Follow the Fed

We expect the Fed to stay on track – one further hike in December and probably three more in 2019. In the euro area, the European Central Bank (ECB) will halt its asset purchase programme in December as planned and has intimated it will recommence rate hikes next summer.  


Lyxor $ Floating Rate Note

Expect more policy and political uncertainty in Europe

After a spurt of above-potential growth, the eurozone is now slowing towards its trend rate, as concerns linger regarding Italy’s diminished economic prospects and the UK’s recent slump in economic activity. We note however that recent talk of a soft Brexit, if confirmed, could offer a silver lining prompting a GBP bounce.


Lyxor FTSE EMU Minimum Variance 

Things we are watching out for

The Main Event

12
Nov

Moving beyond the mid-terms   

Other major events

4 more things to put in the diary

03
Dec

OPEC meeting

13
Dec

ECB meeting (projections)

19
Dec

Fed meeting 

31
Dec

ECB Banking Supervision vacancy

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These are the views, opinions and recommendations of Lyxor International Asset Management (“LIAM”) Cross Asset and ETF research analysts and/or strategists as at  8 November 2018. To the extent that this research contains trade ideas based on macro views of economic market conditions or relative value, it may differ from the fundamental Cross Asset and ETF Research opinions and recommendations contained in Cross Asset and ETF Research sector or company research reports and from the views and opinions of other departments of LIAM and its affiliates. Lyxor Cross Asset and ETF research analysts and/ or strategists routinely consult with LIAM sales and portfolio management personnel regarding market information including, but not limited to, pricing, spread levels and trading activity of ETFs tracking equity, fixed income and commodity indices. Trading desks may trade, or have traded, as principal on the basis of the research analyst(s) views and reports. Lyxor has mandatory research policies and procedures that are reasonably designed to   ensure that purported facts in research reports are based on reliable information and (ii) to prevent improper selective or tiered dissemination of research reports. In addition, research analysts receive compensation based, in part, on the quality and accuracy of their analysis, client feedback, competitive factors and LIAM’s total revenues including revenues from management fees and investment advisory fees and distribution fees. Click here for more.