Swiss Life Asset Managers anticipates a U-shaped economic recovery. It remains defensively positioned and is investing where central banks are intervening.
Central banks are using almost every means to limit the economic damage caused by the pandemic: unlimited quantitative easing by the Bank of Japan, direct lending to corporate bond issuers by the Federal Reserve and even purchases of junk bonds are just a few examples.
Although the credit markets calmed down in April, Swiss Life Asset Managers remains sceptical. So far, earnings have fallen by 25% in Europe and 15% in the US, and most companies have lowered their forecasts.
Swiss Life Asset Managers therefore expects a U-shaped economic recovery rather than a V-shaped one, although the extent of the collapse and the duration of the recovery are still very unclear. It therefore remains underweight in credit risk and is focusing on short-term USD corporate bonds and CSPP securities.