Horizon Handout December 2023

Economics

• Germany is in troubled waters. In addition to the weak economy, the government is in crisis.
• The U.S. economy is cooling down, but the landing should be fairly soft. The labour market is still quite stable.
• The disinflationary process is continuing. The pressure on central banks to act is decreasing significantly.

Equities

• Global equity markets rally across the board. Technicals and Goldilocks hopes supported the rally. Valuations have risen recently.
• Earnings estimates for 2024 remain very optimistic. Strong consensus harbours risks.
• Share buyback programmes and systematic strategies offer opportunities for the rally to continue until the end of the year.

Bonds

• Expectations of interest rate cuts prevail. Rating surprises from Moody's support peripheral bonds.
• Spreads in the IG segment remain attractive. Despite good performance, HY inflows almost unchanged over the year.
• Declining interest rate volatility in US government bonds and falling commodity prices support emerging market bonds

Alternative investments

• Oil trapped in the supply-demand structure. OPEC meeting should provide a positive catalyst.
• Gold price close to all-time high. Further price potential limited without Fed turnaround after strong rally.
• Industrial metals with high heterogeneity. Green demand is (already) providing long-term support.

Currencies

• In general, the weak economy continues to weigh on the euro exchange rate. Nevertheless, the euro has recently recovered.
• The US dollar remains in demand as a safe haven, but has weakened somewhat following favourable inflation data.
• The Swiss franc remains in demand in the tense geopolitical environment. EUR/CHF remains below parity.