Horizon Handout February 2022

Economics:

• The omicron wave brings further restrictions to the economy. The upswing is interrupted.
• Inflation reaches its peak. The no-covid policy in China poses risks - intermediate products may become scarcer.
• The surge in prices forces the central banks to turn around. The Fed and BoE march ahead, ECB remains hesitant.

Equities:

• The start of the year was marked by rising interest rates and a strong style rotation. Europe held up better than the US.
• More restrictive central banks pose a real threat to high valuations. Equity market returns are likely to be lower.
• We remain cautiously optimistic with a slight equity overweight, even though the market is likely to remain volatile.

Bonds:

• Bond sell-off in response to tighter Fed statements. Yield rise was driven by real interest rate rise.
• EM bonds caught between economic recovery and rising US interest rates. Spreads have risen.
• We underweight bonds and remain cautiously positioned on credit risk. Duration: short.

Alternative investments / commodities:

• Omicron worries have subsided. Today, supply concerns surrounding the Russia-Ukraine conflict dominate the oil market.
• Gold was in demand again thanks to geopolitical risks but continues to react sensitively to the interest rate outlook.
• Industrial metals remain scarce, as inventories show. High energy prices are likely to have an impact this year.

Currencies:

• For the euro, the way up remains rocky. The Fed's January meeting boosts the dollar.
• The Bank of England tightens. The pound can gain - at least temporarily. Sideways movement is likely.
• The euro initially gained against the swiss franc. Now, however, the gains have been eroded again.