Macro Views

Despite the summer’s market volatility shaking the markets up, the ICG house view is that a continued constructive investing environment is supported by underlying economic fundamentals across most major economies.

The spike in market volatility over the summer appears to have been driven primarily the unwinding of yen carry trades. Low liquidity and the self-reinforcing nature of the trade unwinding exacerbated the market moves. Since then, calm has returned and most risk assets have more than recouped their summer losses.

What’s next?

Looking forward, high frequency economic data indicates most major developed economies are seeing continued positive growth, with the economic expansion in Europe and the UK, sluggish, but on track, and early signs the US economy is cooling (but not too much).

With inflation finally starting to near central banks targets, interest rate cutting cycles have begun which should support households, companies and deal flow in 2025.

Aware of risks

Despite these positives, geopolitical risk remains high, with the Middle East and US presidential election in focus.

Idiosyncratic risks also remain high, with the lagged impact of high inflation and interest rates still feeding through the system.

Private markets investing environment

In this environment we maintain a bias for less cyclical exposures, companies with predictable and resilient cashflows, and strategies that provide downside protection and can take advantage of market disruption.

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