April was marked by a deterioration in global economic sentiment, dominated by a resurgence of the trade tensions initiated by the Trump administration. In the United States, growth in Q1 contracted (-0.3% QoQ annualised), due to the strong negative contribution of foreign trade, despite a resilient consumer that limits the risk of a sharp recession. Despite the rapid deterioration in confidence indicators, the labour market remains robust and inflation continues its slow decline. In the absence of a clear deterioration in labour data, the Fed should not be in a position to initiate another rate cut quickly, while the inflationary risks generated by customs barriers and immigration threaten a resumption of price rises from the end of the summer.

In Europe, growth remains modest but positive (+1.2% annualised in Q1) and inflation is stabilising around the ECB's target. After the euphoria that followed the announcement of the German stimulus plan, the reality of the impact and timeframe of this spending, coupled with expectations of a global slowdown, are still leading the ECB to continue its cycle of monetary easing. The rise in the euro and the fall in oil prices are powerful factors for a downward revision of inflation in 2026. Under these conditions, the way is wide open for further cuts over the coming months, leading to an accommodating monetary policy (Ester below 2%).

Fiscal concerns continue to loom large in the USA ahead of the budget talks starting in July, and while they seem to have taken a back seat in some eurozone countries, they are likely to resurface in the second half of the year.

This volatile macroeconomic environment has led us to adjust our portfolio allocation.

Firstly, the risk-off episode that followed Liberation Day, accompanied by a lack of confidence in US assets, led us to strengthen our long position in US and European real interest rates at levels incompatible with economic growth. The widening of emerging risk premiums in external currencies also enabled us to strengthen our long positions (Poland, Colombia, Chile and Mexico). On nominal rates, we reduced our short position on German rates. The deformation of the yield curve, which has been significant in the eurozone since the end of February, explains this structural change that we are beginning to initiate in the portfolio.

Overall, the fund's average modified has been increased to 4.5. While it is still mainly driven by real rates, nominal rates are now making a positive contribution.

On the currency front, we reduced our exposure to the dollar to 3%, in the face of growing uncertainty over US policy, and strengthened our positions in G10 currencies (NOK) and selected emerging currencies (HUF, BRL). This reduction is the consequence of the change in correlation between US rates and the US currency, which is no longer profitable for the portfolio.