Horizon Handout February 2023

Economics

• The worst-case scenarios seem to have been averted. Financial markets are already looking towards recovery.
• Inflation rates seem to have peaked. Nevertheless, inflation remains far above central bank targets.
• The European Central Bank and the US Federal Reserve are tightening monetary policy further, but with smaller steps

Equities

• Strong start to the year thanks to increasing economic optimism and significantly falling inflation. China opening helped.
• With the decline in inflation, markets are likely to focus more on economic and especially earnings developments.
• We are neutrally positioned with a focus on profitable companies. Commodity price profiteers also allocated.

Bonds

• Recovery rally in safe government bonds. US and German inverted yield curve points to recession.
• Corporate bonds as a real alternative to equities due to attractive yields. Local currency bonds preferred in EM.
• We are maintaining the reduced underweight in bonds but are increasingly considering a further reduction.

Alternative investments / commodities

• Oil has a volatile start to the year. Catch-up effects in China offer opportunities. SPR purchases and OPEC limit downside risks.
• Positive momentum drives gold price. With real yields unchanged, the air is slowly getting thin from a fundamental perspective.
• Industrial metals with strong start to the year. Supply remains tight in the short and medium term. Rally temporarily overheated.

Currencies

• The euro continues to benefit from the improved market sentiment and economic outlook.
• The higher risk appetite is weighing on the US dollar. Nevertheless, the US currency remains highly valued.
• Against the Swiss franc, the euro has reached parity again. Further upward potential is limited.