Strong reporting season supported equity markets

Economics

• Global economy loses momentum. Supply bottlenecks and high energy prices are a burden. A touch of “stagflation”.
• Outlook for 2022 is positive as there is pent-up demand; companies want to invest and politicians provide support.
• Inflation: new push in autumn, decline in 2022; however, wage pressure increases – Fed initiates monetary policy shift.

Equities

• Equity markets have corrected on a more hawkish Fed and Covid 19 worries.
• Growth stocks were able to prove themselves again. However, with real interest rates rising, this is likely to become more difficult.
• We have taken advantage of the correction and slightly increased our equity overweight. We remain cautiously optimistic for now.

Bonds

• Covid 19 worries and growth concerns caused yields on longer-dated government bonds to fall significantly.
• EUR corporate bonds only conditionally attractive despite widening spreads. Asian corporate bonds under observation.
• We underweight bonds and focus on credit risk and off-benchmark themes; duration short.

Commodities

• Gold continues to fluctuate sideways around USD 1,800 per ounce. Rising real interest rates limit upside opportunities.
• Covid and economic worries recently weighed on the oil price, but supply shortages should provide support in the medium-term.
• Industrial metals are in wait-and-see mode. Positive economic signals in 2022 could give industrial metals a new boost.

Currencies

• Monetary policy divergence weighs noticeably on the euro. In the meantime, however, the dollar strength has gone too far.
• The sideways movement around 0.85 pound per euro is likely to continue. The UK’s interest rate advantage seems to be priced in.
• The Swiss franc has risen to its highest value since 2015, but the local economy has adjusted in the meantime.