Horizon Handout February 2021

Economics

• Recovery interrupted by second wave of infection. Smaller setback than in spring last year.
• Governments and central banks continue to support the economic comeback with all means at their disposal.
• Monetary and fiscal policy support and vaccines argue for a strong recovery from spring onwards.

Equities

• Equities performed well at the start of the year, with emerging market equities in particular gaining ground.
• Analysts have raised earnings estimates across almost all regions, and valuations have fallen as a result.
• We prefer European and emerging market equities in particular throughout 2021.

Bonds

• Rising inflation expectations are likely to push yields up further. Safe government bonds remain unattractive.
• Investment-grade corporate bonds with limited potential. We prefer market-sensitive segments.
• We underweight bonds and focus on credit risk and off-benchmark themes. Duration: short.

Alternative investments / commodities

• Gold under pressure in the short term due to strong dollar and higher real rates. Emerging markets should boost demand.
• Saudi Arabia boosts oil price and cements supply deficit. US production stagnates.
• Structural demand trends for industrial metals remain intact. However, the high prices are more susceptible to setbacks.

Currencies

• The Italian government crisis is weighing on the euro. Nevertheless, the exchange rate remains above 1.20 USD/EUR.
• As expected, the British pound is benefiting from the Brexit deal. However, the virus brings uncertainty.
• The Swiss franc remains very highly valued because of the many uncertainties.

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