“Valuations are high, but remain far from the excesses seen during the dot-com bubble.”

Do you see the dollar's weakness as cyclical, or do you see a more profound change in the greenback's status within the global financial system?
We need to distinguish between two timeframes. In the short term, the dollar's weakness remains largely cyclical. In particular, it can be explained by the combination of a budget deficit and a trade deficit that continue to widen in the United States. This phenomenon is not unique to the current administration. It is part of a much longer trend observed since the 2008 financial crisis.
Then there is the inflation differential. In recent years, inflation in the United States has been higher than in Europe. At the same time, we have a Federal Reserve that remains relatively accommodating, while some central banks appear to be more vigilant in the face of the risk of a resurgence of inflation.
But beyond these cyclical factors, we are also seeing a slow erosion of the dollar's hegemony. This is a more structural trend. Several emerging central banks are gradually reducing the dollar's weighting in their reserves in favour of other currencies or gold. We are also seeing the development of trade outside the dollar in certain regions of the world.
This does not mean, however, that the status of the greenback is being called into question. Today, no currency still has the financial depth, liquidity and infrastructure to rival it.

Do you see the recent correction in the bond market as creating new opportunities for long-term bonds?
Yes, clearly. The pressure on long-term yields is being fuelled by a number of factors. These include concerns about energy, geopolitical tensions in the Middle East and the situation around the Strait of Hormuz, as well as growing questions about the debt levels of the major developed economies.

However, this correction is now creating much more attractive entry points. Apart from the Swiss market, where yields remain very low, the international bond markets are becoming attractive again. We are gradually emerging from a period of more than ten years of extremely low interest rates. European yields are at levels not seen since the financial crisis. Some dollar-denominated segments are returning to levels comparable to the mid-2000s, and even Japan is gradually emerging from decades of extremely low rates.

We also think that the market is probably overestimating certain risks. Concerns about inflation and public debt are legitimate, but they sometimes seem excessive to us.

To what extent has the recent rise in interest rates brought the risk of inflation back to the forefront?
The market is still strongly marked by the shock of 2022-2023. Investors spontaneously associate the recent rise in oil prices and interest rates with a potential return of the same scenario. Our reading is more nuanced. We do not expect to see a return of uncontrolled inflation, but it is likely that the inflationary regime over the next few years will be higher than that of previous decades. Several structural forces are pointing in this direction.

The first is reindustrialisation. After several decades of globalisation and cost optimisation, governments are now seeking to relocate certain production capacities.

The second is the energy transition. For a long time, the global economy benefited from abundant and relatively cheap energy. Transforming the energy system will require massive investment, which will have a cost.

The third factor is demographic. Ageing populations now raise the question of the capacity of supply to keep pace with demand, against a backdrop of a progressively shrinking workforce.

Then there is the budgetary issue. High levels of debt could lead some countries to tolerate slightly higher inflation in order to gradually reduce the real burden of debt. Nevertheless, we remain in a scenario of controlled inflation. We see inflation lasting at around 2 to 3% rather than a real slippage.

What are the main rules that you apply to build a balanced bond allocation within a portfolio?
The first principle is diversification. A balanced bond allocation can no longer be based solely on traditional sovereign bonds. We now need to diversify the sources of risk and therefore the potential drivers of performance.

Inflationary risk remains the primary driver, since it largely determines the performance of bond markets over the medium and long term. Next comes duration. Positioning on interest-rate sensitivity becomes central and must be adjusted according to the macroeconomic and inflation scenario. We also look at positioning on the yield curve. Different maturities offer different opportunities.

Credit risk is another important lever. We need to determine to what extent it makes sense to stay with the best quality signatures or to seek higher yields in riskier segments.

Finally, there is the question of liquidity, which is often underestimated. On the major sovereign markets, liquidity remains abundant, but as you move away from these segments, it becomes an essential variable to take into account.

Our approach is therefore to exploit these different levers while avoiding excessive accumulation of risk.

The surge in AI-related investment is boosting technology stocks and semiconductors. How far can we remain constructive on this theme without underestimating the valuation risks in the short term?
Valuations are indeed high, and it is natural for investors to draw parallels with the technology bubble of the late 1990s. But we believe that the comparison is rapidly reaching its limits. At the time, a large part of the upside was based on companies that were not very profitable, sometimes heavily indebted and generating little cash flow. Today, the momentum is driven by highly profitable technology leaders with strong balance sheets, considerable investment capacity and often very low levels of debt.

Valuations are high, but nowhere near the excesses of the dotcom bubble. We therefore remain positive on this theme. Infrastructure investment continues to accelerate. The potential productivity gains remain considerable and are already starting to show up in company results.

What is particularly interesting is that the effects are now extending beyond the world of technology alone. The gradual adoption of artificial intelligence is spreading to many business sectors and is already underpinning the profitability of some companies.

We are still in the early stages of the adoption cycle. There will undoubtedly be phases of volatility, profit-taking and probably periods of doubt, but the underlying trend seems to us to be sustainable.

Apart from the major technology stocks, where do you see the most interesting opportunities on the markets today?
We see several long-term trends. The first is re-industrialisation. Developed economies are gradually seeking to rebuild their industrial capacity after decades of relocation and globalisation. This opens up opportunities in infrastructure, industry and certain segments of the supply chain.

The second area is energy. The modernisation of networks, the increase in production capacity, the needs associated with electrification and the rise of artificial intelligence all imply considerable investment.

We are also looking at a number of commodities that have become strategic, notably those linked to the energy transition, electricity infrastructure and nuclear power.

Finally, healthcare remains a major structural theme. The ageing of the population is a powerful driver for the years ahead, and should continue to underpin investment in this sector.