ABN AMRO Private Banking reduces strong underweight in bonds.

Press release -

ABN AMRO Private Banking is more positive about bonds. ABN AMRO’s private bank therefore shifts its position in bonds from heavily underweight to underweight. The increase in bond holdings will be funded by cash. ABN AMRO Private Banking says the main reason for this change is the attractive yield on government securities of the peripheral euro countries, with a current preference for Italian treasuries.

The rates on 10-year US Treasuries are rising steadily this year and – albeit somewhat delayed – European bond rates are following. The private bank however, at this point, does not consider the yield on the government bonds of the core countries (like Germany) to be attractive enough. This in contrast to the yield on government securities of the peripheral euro countries. The preference for Italian treasuries is prompted by the present yield of about 2 percent. ABN AMRO Private Banking does not expect the Italian elections on march 4th to cause any major upset, and believes that the current yield reflects a market that has already taken into account the existing risks.

Anticipating future developments

Mary Pieterse-Bloem, Global Head Fixed Income at ABN AMRO Private Banking: “Bond yields have risen to levels we haven’t seen for years. One of the reasons is the expected rise in inflation. We think that inflation will remain subdued though, and that central banks will not raise rates more aggressively than their forward guidance leads us to believe. According to us, the market is rather ahead of itself. This creates an ideal opportunity to raise our bond holdings. With this reallocation of assets we are also anticipating future developments, in which we will enlarge our bond portfolio step by step. At this moment our bond holdings are still below our strategic benchmark.”

Solid foundation

Following a lengthy period of market optimism ABN AMRO Private Banking considers the current correction in the stock market to be healthy. According to the private bank a slightly overweight position in stocks is still justified. Pieterse-Bloem: “We have no reason to believe that the price correction in stocks changed the economic outlook. The macro economy has a solid foundation which we believe will remain in place. Also, company profits and prospects are good while business and consumer confidence remain positive indicators. Neither do we fear a peak in inflation.”

Positive about real estate

ABN AMRO Private Banking remains positive about real estate, and neutral about commodities and hedge funds.


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