Discover Thomson Reuters By Lisa Pauline Mattackal 3 Min Read (Reuters) – The “risk-on” stock market rotation of recent weeks may not last long into 2021 as it has largely priced in the roll out of COVID-19 vaccines and an economic recovery next year, according to the head of global market strategy at French asset manager Natixis. Esty Dwek told the Reuters Global Markets Forum that investor allocations in December would suggest how far the trade, where some of the “cyclical”, growth-dependent stocks hit hardest in the coronavirus crisis recover, has to run. “Once we add November and December, how much catch up will be done already?” Dwek asked in a conversation held as part of the Reuters Global Investment Outlook Summit 2021. Based in France, Natixis Investment Managers manages about $1.06 trillion in assets, making it a major player on financial markets. Dwek said she did see room for stocks in Europe and emerging markets, led by Asia, to catch up to Wall Street. “Risks are mostly idiosyncratic – domestic politics, global trade, U.S.-China tensions, and debt levels, but for now we see more tailwinds than hurdles,” she said about emerging markets. U.S. fiscal stimulus will, however, not be large enough to result in material inflation, despite recent jumps in market-priced inflation expectations. U.S. 5-year, 10-year and 30-year breakeven rates,, touched 18-month highs on Tuesday on expectations Congress would pass another round of COVID-19 aid soon. “The inflation we will probably get in the middle of next year will be transitory and due to base effects,” Dwek said, adding that any further weakness of the U.S. dollar would be limited. Aside from COVID-19 and a lack of government spending, Dwek feels geopolitical tensions are the biggest threat to growth next year as investors may be too sanguine about U.S. President-elect Joe Biden’s foreign policy. “Expectations are for an easing in tensions with China, but it will not be as smooth as people expect, [while U.S.] relations with Europe should improve, challenges remain on digital tax, trade and green initiatives,” she said. For other news from Reuters Global Investment Outlook Summit 2021, click here Follow Reuters Summits on Twitter @Reuters_Summits (This interview was conducted in the Reuters Global Markets Forum, a chat room hosted on the Refinitiv Messenger platform. Sign up here to join GMF: refini.tv/33uoFoQ) Reporting by Lisa Mattackal and Aaron Saldanha in Bengaluru; Editing by Patrick Graham and Arun Koyyur Our Standards: The Thomson Reuters Trust Principles. All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.