Horizon Handout March 2021

Economics

• Recovery interrupted by the second wave of infections. Smaller setback than in Spring 2020.
• Governments and central banks continue to support the economic comeback with all means at their disposal.
• Monetary and fiscal policy support and vaccines call for a strong recovery from spring onwards.

Equities

• Stock markets have gained in a volatile manner. Under the surface, the rotation into cyclicals/value stocks continues.
• Analysts have raised earnings estimates across almost all regions, and valuations have fallen as a result.
• An optimistic investor sentiment as well as a risk-on positioning of many market participants call for some caution.

Bonds

• Rising real rates and inflation expectations are causing nominal rates to rise. This trend is likely to continue for the time being.
• Corporate bonds record stable to slightly declining spreads despite risk-off environment. Limited potential.
• We underweight bonds and focus on credit risk and off-benchmark themes. Duration: short.

Alternative investments / commodities

• Gold is currently not in demand. The price temporarily fell below USD 1,800 per oz.. We remain optimistic.
• Brent oil is now above USD 65 per barrel. The supply deficit thanks to restrictive OPEC+ commitments provide a tailwind.
• Industrial metals continued their positive price trend. Rising demand due to the economic recovery is supportive.

Currencies

• Euro ends its small phase of weakness and gains moderately against the USD. US stimulus package may bring new impetus.
• As expected, the British pound is benefiting from the Brexit deal and now also from the rapid progress on vaccinations.
• The Swiss franc remains highly valued. Nevertheless, the euro can currently gain more than one cent against the franc.

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