News

Improved macro data in the US created a friendly market environment. The US labor market data for September was unexpectedly good after two disappointing months. As the weak previous month's data was revised upwards and the unemployment rate fell to 4.1%, the picture is one of an only slightly cooling labor market. This would be consistent with the expectation of a “soft landing” for the US economy, flanked by successive interest rate cuts by the Fed, which could prevent the economy from falling into recession. The ISM Purchasing Managers' Index for the service sector in the US has made a strong upward leap. Even though the manufacturing sector is treading water there, the improvement in sentiment for the service sector is positive. Few new details were published on the Chinese fiscal package. Market participants are hoping that the announcements will be followed by action. However, the Chinese stock markets continued their upswing.

On the inflation front, the all-clear has been given to the eurozone. Overall inflation fell to a three-and-a-half-year low of 1.8%, driven primarily by energy prices. The core rate fell to 2.7 percent, as the annual increase in service prices only fell to 4.0 percent. The inflation figures from the USA, where overall inflation and the core rate were stronger than expected, came as a surprise. The annual core rate rose from 3.2% to 3.3%.

This surge in inflation led to higher yields on the bond markets and therefore price losses. In the wake of the US Treasury bond (+35 basis points to 4.11%), the Bund yield rose again (+14 basis points to 2.27%). Investment-grade corporate bonds were also unable to escape this interest rate environment. However, the losses were lower due to their shorter duration. High-yield bonds recorded a small gain. This development was advantageous for the Moventum portfolios. Following the fall in interest rates in the third quarter, the duration was deliberately left shorter for the fourth quarter, which mitigated the price declines. The addition of corporate bonds also provided positive impetus on the bond side.

US stocks made gains on the equity markets. Local investors benefited from currency gains as the US dollar strengthened again. Japanese and European equities recorded losses, with the Swiss stock market in Europe recording the smallest losses. Emerging markets underperformed industrialized countries despite the positive development in China. This benefited the portfolios with their slight overweighting of the USA. The performance of growth and value was balanced in the past two weeks despite the rise in interest rates and did not have a decisive influence on portfolio performance. At sector level, the escalation in the Middle East caused crude oil prices to rise. The overweight energy companies in the portfolio benefited from this. The highly weighted healthcare sector performed in line with the market, while financials (neutral weighting) outperformed. The highly weighted technology sector also outperformed. Small caps in Europe and the USA were unable to generate any added value compared to large caps, which had a negative impact.

On the Moventum portfolio side, the equity-heavy strategies performed positively in the past two weeks, while the bond-heavy strategies suffered slight price declines. These were lower than for the benchmark indices due to the shorter duration positioning. On the equity side, it was not possible to keep up with the price increases. In addition to exposure to small and mid caps, the underweighting of China had a negative impact.

The PWM portfolio showed stability thanks to its broad multi-asset positioning. Positive performance contributions came from mixed funds and global equity strategies. The bond side largely escaped the price losses. European equity funds performed negatively, and the gold price corrected slightly. Among the alternatives, the Aquantum Active Range hedging fund fell slightly, and the Plenum Cat Bond Dynamic suffered a price decline.