Horizon Handout May 2023

Economics

• The deep economic slump in winter did not materialise. Now the focus is on the recovery.
• Stubborn inflation: Even if the peak has been passed, it is still too early to sound the all-clear.
• The central banks are likely to tighten a little further. But the last interest rate hikes are not far away.

Equities

• Q1 reporting season positive so far. However, analysts do not expect much global earnings growth in 2023. 2024 more positive.
• Valuations have risen again recently. Indices close to YTD-highs. Investors are less complacent under the surface.
• We remain cautious, as after the rally the risk-reward ratio does not look very attractive.

Bonds

• Renewed worries about banking sector and US debt ceiling let government bonds profit as safe havens.
• Credit risk was in demand again after the limited bank turmoil. EM high-yield bonds are the exception.
• We currently feel well positioned with a slight underweight. Increasing duration is increasingly sensible.

Alternative investments / commodities

• Gains since OPEC+ cut fully surrendered. US driving season and Chinese Golden Week provide tailwinds.
• Gold fluctuates around the $2,000 mark on mixed economic data. Fundamental potential limited in the short term.
• Slow recovery in China dampens industrial metals. Supply remains tight and long-term trends intact.

Currencies

• Despite brief setbacks: The euro continues its recovery and is trading at 1.10 US dollars per euro.
• The US Federal Reserve must simultaneously ensure price and financial stability. The Fed is likely to tighten only moderately.
• The Swiss franc remains strong - much to the liking of the Swiss National Bank.