News

The change of the quarter was volatile on the stock and bond markets. Sentiment fluctuated between risk-on and risk-off sentiment, and the macroeconomic data showed a clear discrepancy in the development between Europe and the USA. This is reflected in particular in the contrary development of the so-called "Economic Surprise Indices". These indicate how much better or worse published economic data deviates upward or downward from the consensus forecast ("surprise") and give an indication of how (in)accurately the majority of market participants assess the current economic development. Data in the U.S.A. have recently been particularly surprising on the upside, while the eurozone has been excessively disappointing. For example, the German ifo business climate index fell much more sharply than expected. Not only the current situation but also business expectations were assessed as significantly worse. There is therefore no end in sight to the recession in Germany. In contrast, GDP in the USA was revised significantly upwards in the first quarter, and the second quarter also appears to have been robust. The service sector, which is important for the economy, continues to show particular strength in the USA. Although the highly regarded U.S. labor market data were somewhat weaker than expected, they indicate a continued solid development, particularly in terms of the unemployment rate and the development of hourly wages. In an environment of solid economic development, especially in the USA, the markets further revised back their expectations of an imminent recession and the associated interest rate cuts by the Fed. Accordingly, interest rates rose significantly at both the short and long ends, and in the USA the 10-year government bond is once again trading above the 4 percent mark. With their continued overall shorter duration positioning and significant investments in near-money market assets, portfolios largely escaped the price losses in the wake of rising interest rates. They also benefited from the fact that spread investments, i.e. investment-grade and high-yield corporate bonds, outperformed government bonds, as these market segments benefited from the ongoing positive economic environment. Equity markets were volatile over the course of the two weeks, but ultimately posted a small gain compared to the MSCI World Index. However, this was solely due to the positive development of the US equity markets, whose weighting in the Moventum portfolios has been increased since the current third quarter. The Japanese equity market, which is overweighted in the portfolios, also performed significantly better than Europe. Emerging markets suffered losses as the strength of the economic recovery, especially in China, continues to leave much to be desired. On the style side, the portfolios benefited from selected value exposures. However, the defensive sectors healthcare and consumer discretionary, which are prominently weighted in the portfolios, did not participate in the value outperformance. However, the highly weighted IT sector outperformed despite headwinds from interest rate developments. Driven by weak bond markets and the weak European equity market, overall market performance was ultimately negative. The Moventum portfolios were not able to fully escape these conditions, but were able to significantly reduce losses. The largest contribution was made by the duration positioning on the bond side and the high weighting of the US equity market on the equity side. The PWM portfolio was also unable to escape the difficult market environment and showed a slight decline in prices. In particular, the development of the bond markets had a negative impact on most mixed fund and bond strategies. Only bond funds with a focus on floaters were able to convince with a positive performance. In addition, the convertible bond market again showed a positive performance and within the alternatives, cat bonds proved that they are completely uncorrelated to the common equity and bond market risks. The gold price trend also continued to prove disadvantageous in the rising interest rate environment.