The second quarter saw many major economies grappling with COVID-19, first as a health crisis and then as an economic catastrophe. With the political preference now for local rather than nationwide lockdowns, it is unlikely that the economic data will revisit its April lows.
We believe improving economic data can continue to drive the recovery in risk appetite. If markets remain stable, we expect investors to take on more risk. With cash and government bonds yielding so little (broadly negative throughout Europe) it will be increasingly difficult to justify overweight positions in low-risk assets.
Read the Q3 Bond Compass to access fixed income flows and holdings data for the last three months and to read our ideas for finding yield during the next quarter.