A European recession looked like a no-brainer just a few weeks ago, but that picture has changed dramatically, and investors have started pouring money into the region's stocks, currency and bonds.
BofA European equity strategists, for example are "positioned against consensus view", as they feel recent monetary tightening, the harshest in four decades, will lead to a recession, which will drag down stocks.Banca Ifigest's Lottici said the "sword of Damocles" of the war in Ukraine still dangles over Europe.
"Europe is recovering in a big way," Nomura FX strategist Jordan Rochester said. His bank expects the euro to reach $1.10 by the end of January and $1.16 by year-end. On the one hand, he said lower inflation and less need for debt issuance to fund energy subsidies is positive for bonds, but this has to be weighed against higher growth, which tends to hurt traditional safe-haven.
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