Bank of America He has published a European Variable Income Analysis in which he suggests the possibility of making a rotation from cyclic values to defensive values. According to the financial entity, cyclic values in Europe have reached their maximum level of the last 30 years compared to defensive, indicating a higher stock market performance of companies sensitive to the economic cycle.
Bank of America emphasizes that cyclic companies, those sensitive to the economic cycle, have exceeded defensive companies, operating in essential sectors for the economy and are less sensitive to economic fluctuations. This phenomenon is supported by an apparent exhaustion of the economic cycle, with signals of weakening of growth and labor market in the United States.
According to Bank of America economists, the US GDP growth is expected to weaken in the third quarter, standing around 1%, as well as final demand and private payrolls. Given this panorama, an increase in risk premiums and a better performance of defensive values in the market is expected.
The Bank of America analysis projects an 8% drop for European cyclical values compared to defensive in early 2026, based on macroeconomic expectations of growth deceleration. This opens the door to a possible rotation of portfolios towards defensive sectors such as pharmaceutical and food.
In this sense, the financial entity recommends underfolding cyclical sectors such as banks, which are currently being highly valued by consensus, and capital goods. These sectors tend to have a lower yield in economic growth environments and increased risk premiums.