Horizon Handout August 2023

Economics

• In Germany and the Eurozone, sentiment remains weak after the winter recession.
• Disinflation: Inflation is decreasing in the Eurozone, the US and now also in the UK.
• Even though inflation is still too high, central banks are approaching or have already reached the interest rate peak.

Equities

• The Q2 reporting has season started. Company outlook more crucial from Q4 onwards as analysts are still quite optimistic.
• Equity performance predominantly valuation-driven. Optimism dominates, which makes the market vulnerable.
• We maintain the equity underweight and see a risk of a setback in Q3. Disappointment potential has increased.

Bonds

• In the face of possible interest rate cuts safe government bonds in the US and the Eurozone are now in demand.
• European high yield bonds are not priced attractively anymore, so our preference is for investment grade bonds.
• In emerging markets, we remain overweight in Latin America. Asia, on the other hand, offers significant catch-up potential.

Alternative investments / commodities

• Oil price with strong recovery thanks to tighter supply. Developments in China and OPEC policy crucial in the short term.
• Gold remains highly valued. Investors are steadily reducing their positions. Still an important portfolio constituent for hedging.
• Industrial metals continue to stabilise. Structural growth in demand due to renewable energies already visible.

Currencies

• In the US, inflation is falling faster than expected. In the Eurozone, the economy is sluggish. What are the central banks doing?
• The US Fed and the ECB are very close to the interest rate peak. The probability of further tightening is decreasing.
• The Swiss franc remains strong - both externally and domestically: inflation has fallen below 2% again.