PARIS (Reuters) – The divergence of monetary policies should increase on both sides of the Atlantic next year, while credit should remain attractive, estimates AllianzGI, which remains cautious on its equity positioning.

If the European Central Bank (ECB) must deal with weaker activity than in the rest of the world and which is calling for more rate cuts, the Federal Reserve must on the other hand manage the uncertainties linked to the election of Donald Trump, summarizes Matthieu de Clermont, director of insurance investments & regulatory strategies at the asset manager.

The American economy should continue its slowdown without recession, while growth in the euro zone should recover but remain below 1% next year, adds the manager.

In this context, “the risk environment for the bond market remains positive”, summarizes Vincent Marioni, head of credit investments.

Corporate margins remain resilient, which should allow defaults to remain contained, while refinancing needs are limited next year.

“Investors sought to capture yield, which was supported by the rebound in sovereign rates. The movement should continue, because credit will continue to offer attractive returns,” adds Vincent Marioni.

“Rate spreads should not, however, tighten further but remain around their current levels.”

In 2024, the outstanding amounts of funds exposed to quality credit increased by 12.4%, compared to 14.6% for funds exposed to high yield, and issuers were able to take advantage of this appetite, with gross issues totaling 697 billion euros in Europe.

The significant volumes of outstanding money market funds, more than 650 billion euros at the beginning of November, could support credit as investors rotate, triggered by the ECB’s easing of rates, estimates AllianzGI.

European stocks also offer attractive valuations and yields, particularly compared to US assets where the risk premium has become negative for the first time since 2002.

Catherine Garrigues, director of the Convictions equity strategy, also recalls that investors sanctioned European exporters following the election of Donald Trump because they were worried about their exposure to the United States.

However, “only 6.2% of the turnover of listed European companies could suffer from an increase in customs duties. This would particularly concern the medical technology and automobile segments, for which American competition is important,” explains the manager.

(Written by Corentin Chappron, edited by Blandine Hénault)

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