Search for safe havens set to resume

We think tougher times lie ahead for risky assets. Enthusiasm for equities is likely to be curbed by a turn in the US profit cycle, an absence of additional unconventional monetary stimulus from the Fed and a renewed flare-up of the crisis in the euro-zone. The latter should weigh particularly heavily on stock markets in the region, even though valuations are now low from a historical perspective and relative to the US. Precious metals aside, most commodities should also come under pressure, especially if the dollar gains ground as we expect. Finally, the continuation of rock-bottom interest rates should keep the 10-year Treasury yield firmly anchored around 2%.