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Economics
The French rejected the European Constitution with a clear majority of 55%, putting President Chirac in a tough position and dealing a blow to European integration.
This week we expect US employment report for May to continue its positive trend. In Europe we expect the ECB to keep interest rates steady at 2.0%. May business sentiment indices for the Eurozone are expected to deteriorate in line with recent national indices.
Fixed Income
It has finally happened: GM and GMAC have been downgraded to high yield. This provides short-term, active investors with an entry point into cheap GMAC bonds. Other auto manufac-turers' bonds should also benefit.
We prefer to wait for a better moment to enter the High Yield market. European Inflation-Linked bonds are underperforming conventional bonds, and should continue to do so in the coming months.
Equities
First equity markets seemed to take a pause but later on strong GDP-figures in the US encouraged them to resume their rally. The rising oil price lost importance as US consumers proved to be quite resilient to it. The tech sector took advantage of the improved economic perception.
Internaxx
