Cash and bonds move more into focus

Looking ahead to the current month of July and the upcoming summer months, we are becoming somewhat more cautious. Holding a little more cash or selectively switching from equities to bonds seems sensible. One reason for us is US consumption, which is developing more weakly than expected.

The authors

From the strategy team of DJE Kapital AG 

DJE's strategy team continuously monitors and evaluates the markets using its proprietary FMM methodology based on fundamental, monetary and market technology indicators.  

A broad economic upturn in the US is not currently in sight. Looking ahead to the coming months, we therefore expect the US economy to weaken. This should make the environment for equities more difficult and, in some cases, falling or lower than expected earnings growth more realistic. However, inflation is also likely to fall in such an environment, which could also create more opportunities on the bond side. Bonds remain particularly interesting in the medium maturity range, and a gradual lengthening of duration still appears to make sense. The current trends on the equity markets, i.e. above all the outperformance of highly weighted and therefore highly capitalised companies in the indices that have sustainable business models, could continue. In general, active investors are still underweight in the largest US equities, the so-called "Magnificent Seven". Japan in particular remains interesting for us as an admixture.


  • Japan continues to have the lowest real interest rate internationally and Japanese equities have the highest risk premium. The Japanese market has also risen across the board. Japanese financial stocks often continue to show good relative strength and are also a good hedge if the Japanese yen (JPY) does appreciate more strongly.
  • Weak US consumption and the weakening US economy are also likely to put further downward pressure on inflation, which improves the risk/reward ratio on the bond side.
  • We continue to see opportunities in shares of companies whose business model is largely independent of the economy with high margins and which ideally also have a certain cost-cutting potential.
  • In the longer term or with a view to the next ten years, there are few reasons why equities should not perform similarly to the past ten years.
  • Oil and gas stocks and energy stocks certainly offer catch-up potential. If the oil price remains above USD 80 per barrel, many of these stocks offer a total return of more than 10 per cent from dividends and share buybacks.


  • We see risks in a stronger devaluation of the Chinese renminbi (RMB). The economic situation is currently no better than in 2015, when China last devalued the RMB. China could resort to this means to stimulate its own exports.
  • US consumption is showing signs of weakness, which can also be seen in the latest figures from General Mills and NIKE, for example, and is also developing less dynamically than expected. Earnings growth and earnings prospects in consumer-related sectors are still under pressure for the time being.
  • US fiscal policy is currently less expansive and therefore not as stimulating as in 2022.
  • Another Donald Trump presidency would limit the US Federal Reserve's room for manoeuvre. A new Donald Trump presidency would also likely bring new tariffs and trade restrictions, which would represent a headwind for European exporters.
  • A lack of market breadth can also be seen as a risk: Looking at the US, for example, only the technology and media sectors have shown relative strength over the past six months. The same applies to Europe, where banks and insurance companies are also showing relative strength.


Note: Marketing advertisement - All information published here is for your information only and does not constitute investment advice or any other recommendation. The statements contained in this document reflect the current assessment of DJE Kapital AG. These may change at any time without prior notice. All statements made have been made with due care in accordance with the state of knowledge at the time of preparation. However, no guarantee and no liability can be assumed for the correctness and completeness.