For the last 2 years, the economy has held up extremely well in the light of the present CB hiking cycle. Yet, the case of SVB is a start reminder that hiking rates has an effect, at some point.
Our base case scenario: With risks related to SVB and SBNY contained for now, we think the fundamental outlook for the next six to 12 months hasn’t really changed, with both soft and hard landings still very plausible scenarios. Our preference goes to investment related to strong secular growth trends such as energy transition and more defensive areas such as global consumer stables. Additionally, we favor high quality corporate credit opportunities – while economic growth is expected to be lower, the default risk on 3 to 5 years opportunities should be limited in the HG and IG segment.