Horizon Handout October 2021

Economics

• As expected, the economy was very strong in summer. In autumn, the upswing will slow down somewhat.
• One issue is supply bottlenecks, another is inflation. Central banks are coming under pressure to act.
• The ECB can steer monetary policy under its flexible pandemic purchase programme. Interest rate turnaround a long way off.

Equities

• Western equity indices near all-time highs. Chinese regulation weighs on emerging markets.
• Corporate profits should increase again next year, but growth rates should decline. Asia with catch-up potential.
• We remain constructive on equities and consider a significant correction unlikely.

Bonds

• Safe-haven government bond yields resume their rising trend after the summer low.
• In view of high valuations, we are taking a defensive stance on corporate bonds.
• In emerging markets, we see further upside potential in high-yield government bonds.

Alternative investments / commodities

• Oil price rally since the beginning of the year was followed by consolidation in Q3. Oil supply deficit supports until end of year.
• Gold anticipates tighter monetary policy. Risks such as geopolitical conflicts harbour surprise potential.
• Industrial metals suffered from the cooling of the reflation trade. However, fundamental drivers remain intact.

Currencies

• The US dollar is benefiting from the prospect of a monetary policy turnaround and increased uncertainties
• Little news on the British pound: It is fluctuating at 0.85/0.86 pounds per euro. Can the Bank of England provide a boost?
• Euro with interim recovery against the Franc. Can the Swiss currency now benefit from rising uncertainties?

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