Link
Video recorded on 6 July 2026
The energy shock linked to the U.S.–Iran conflict appeared to be easing with the reopening of the Strait of Hormuz. However, the resumption of strikes in the region has changed the picture.
In this fragile environment, we present our assessment of the economic outlook and our investment convictions for the months ahead.
The outlook for the global economy appears to be improving significantly for the coming quarters. Our scenario had already factored this in just over a month ago. However, we are seeing that the fall in oil prices, which we had anticipated, is happening much more quickly than expected.
Over the past week, Brent crude oil has averaged below $73 per barrel, compared with a peak of $120 in April. Natural gas prices have also declined, although at a somewhat slower pace.
This oil price "counter-shock" should help offset the loss of purchasing power experienced in recent months. In addition, with the end of hostilities, it should contribute to a rebound in confidence.
This should support a recovery in economic activity, particularly in Europe, which had suffered more than other regions. The rebound is likely to be more modest in the United States, where the economy proved more resilient.
The positive impact of lower energy costs will reinforce the ongoing tailwinds provided by public stimulus plans in Germany and the United States, as well as continued investment in artificial intelligence.
A faster decline in energy prices should help inflation slow significantly. In our view, this disinflation process should be more pronounced in Europe than in the United States.
In this context, we continue to believe that central banks should not overreact to the inflation surge experienced over the past few months.
We expect the ECB to keep interest rates unchanged through the end of the year. By contrast, the Federal Reserve is likely to raise rates at year-end to accelerate inflation's return to its 2% target.
The gradual recovery in economic activity that we anticipate should support risk-taking, particularly benefiting sectors that are most closely linked to the economic cycle.
As for government bonds, we have already seen a sharp decline in long-term yields following the drop in energy prices. This leads us to maintain an underweight position on this segment.
However, we still see some room for yields to decline at the short end of the curve, as market expectations for policy rate increases remain, in our view, too aggressive.
We maintain a neutral stance on European credit, as spreads remain very tight. Nevertheless, we continue to capture the carry offered by the asset class.
We are also rebalancing our allocation between Investment Grade and High Yield credit. The improvement in economic prospects, combined with an expected slowdown in issuance volumes, should support the High Yield segment. However, we remain highly selective.
We are moving to an overweight position in equities. This asset class should be the primary beneficiary of the improving economic environment, particularly sectors most sensitive to the economic cycle.
This should help reduce the performance concentration seen in recent months, characterized by the dominance of stocks linked to the development of artificial intelligence, especially semiconductor companies.
From a regional perspective, we favor the United States, supported by the technology sector, as well as Europe, which stands to benefit from the economic recovery, and China, where valuations appear attractive.
Overall, the reopening of the Strait of Hormuz would bring a wave of optimism to the global economy and is likely to provide support for the markets in the coming months.