News

Two eventful weeks increasingly called into question the prevailing macro picture of an approaching recession, and one could almost get the impression that the mood of market participants has shifted from "hard landing" to "soft landing" to "boom" within a few days. What sounds good for the economy and the working population, however, is "bad" for the financial markets. From the perspective of the financial markets, the absence of a recession means that the longed-for "pivot" of the central banks may be a long time coming after all, as inflation is falling less quickly than hoped and instead the motto is "higher for longer". Even if the major interest rate hikes by central banks are likely to be over, the robustness of the economy and the labor market could mean that they gradually raise key rates further and then leave them in the restrictive range for a longer period of time. This is not a very pleasant prospect, especially for the stock markets. The central bank decisions on this side and on the other side of the Atlantic that took place in the course of last week were viewed by market participants as "dovish" on the whole. As expected, the Fed increased by 25 basis points and the ECB by 50 basis points. The ECB commented that there would probably be a further increase of 50 bp in March. After that, however, it wanted to adopt a wait-and-see stance - this still sounded distinctly "hawkish" at last December's meeting. However, this dovish narrative was shattered by the US labor market report, which was massively above the consensus forecast. The purchasing managers' index for the service sector in the U.S. also performed much better than expected and is once again clearly quoting in expansion territory. All in all, this caused interest rates to rise slightly in the reporting period. However, the positive economic outlook ensured growth in credit investments. Accordingly, portfolios benefited from both their short duration positioning and their significant credit investments in both investment grade and high yield. On the equity side, the positive sentiment prevailing since the beginning of the year still prevailed, further boosted by central bank statements. Accordingly, global equity markets gained, with gains in the USA, led by growth stocks, being larger than in Europe and Japan. Emerging markets failed to post a positive performance, with China's equity markets falling after an initial euphoria in the wake of the end of the Corona measures. For the portfolios, the positive (overweight U.S.) and negative effects (overweight Japan and EM) of the regional asset allocation were thus balanced. At the sector level, portfolios benefited from their overweight to the technology sector but suffered from their overweight to the energy segment, which struggled in the "growth" environment. Defensive sectors, such as the overweight healthcare sector, also continued to be out of focus for market participants, who preferred more cyclical exposures (industrial sector). On the currency side, the U.S. dollar was slightly weaker. In the meantime, the mark of 1.10 EUR/USD was already cracked, before the US dollar was able to gain again in the wake of the good US labor market data. The Moventum strategies were mainly able to participate in the positive market development. The PWM portfolio also benefited, initially, from the tailwind for the equity and credit markets. However, due to the continued low equity beta, participation was rather below average. The fixed income side benefited from its short duration and the continued narrowing of spreads, so that all allocated products made positive contributions. The mixed funds and the convertible bond fund, which benefited in particular from its growth orientation, also scored. The gold price, however, trended sideways. In a difficult market environment from a long/short perspective, both funds had to accept a negative performance due to one-sided factor movements. The picture for alternatives was also mixed, with the PWM portfolio suffering a slightly negative weekly performance.