"By comparison, stickier inflation in the US – and a subsequent delay to the start of the US Federal Reserve rate-cutting cycle, now likely to commence around the end of 2024 – is contributing to economic deceleration. That is expected to be a drag on some US-dominated asset classes, such as high-yield bonds.
"What is important to note here is not that the European economy is only expected to grow at half the rate of the US. Rather, it is the change that matters most: conditions in the Eurozone are improving, while they are deteriorating in the US, although we do not see a US recession on the horizon.
"We expect those asynchronous trends to be reflected in markets over the balance of this year and beyond."
Brown Shipley’s current positioning is a slight overweight to equities and a slight underweight to bonds.
David Thorpe is investment editor at FT Adviser
