Anchor Insights June 2025

• Stock markets are recovering, despite a cut in earnings expectations.
• Positive performance of fixed income, positive slope of yield curves.
• Dollar recovers, but remains weak due to the fiscal deficit and Trump's "big beautiful bill".
• Oil and precious metals rebound, but no new highs.

• A view on the US trade negotiations with China and the EU.
• Increase in layoffs in large companies, unemployment rate on the rise.
• Fiscal deficit and sovereign debt, new headwinds for the US dollar.
• Downward revision of corporate profits for 2025.

Opportunities:

• Technology: high growth, but high valuations; Accumulate in falls.
• Health and biotech: higher growth than other sectors and attractive valuations.

• Corporate debt and high yield, with tighter spreads and less attractive yields in relation to government bonds. Better yield in USD than in EUR. 
• Rally in IRR in government bonds, both European and American.

• The dollar is weakening on recession risks. The weakness of the USD due to the evolution of the public deficit and debt may be counteracted by geopolitics temporarily, but it should depreciate the greenback in 2025.
• Gold remains above $3,000 in the face of increased demand from China in its change in reserve policy and as a refuge from uncertainty.

• Reduction of international trade, tariffs and increased costs, more inflation.
• Macroeconomic divergence between regions, reduction of liquidity in financial markets, volatility.
• Increase in cybercrime, disruptions in essential infrastructures.
• Financial fragmentation of the Euro-public debt market, debt crisis.
• Political incapacity in the face of inflation, climate crisis and migration cause social tensions, populism.
• Extension of the Israeli-Palestinian war to the Middle East, oil at 200 USD.
• Conflict in Ukraine, escalation of NATO-Russia tension, maintenance of sanctions.

• The trade war opened by Trump increases the risk of global recession at a time of divergence in the phase of the economic cycle between the US, Europe and China. The less restrictive monetary policy slows down in the US, continues in Europe and becomes expansive in China while the US slows down its growth, Europe avoids recession and China seeks recovery. The sustainability of the US debt makes it difficult to lower rates without a budgetary adjustment, in the face of a new legislature dominated by an increase in the deficit.
• The expected growth rate of earnings is reduced from 12.7% to 10.1% in the US and from 12.5% to 6.5% in Europe for the next 12 months, although it will be revised downwards because of the trade war. 
• The war in Ukraine continues with small advances towards a truce, while in the Middle East it fails.