Horizon Handout September 2021

Economics

• The Eurozone economy is growing as expected. At a solid 2%, the temporarily higher inflation rate remains moderate.
• In contrast, inflation in the US is remarkable. At more than 5%, the central bank cannot remain inactive for much longer.
• The Fed will implement its exit from emergency policy cautiously so as not to stall the economy.

Equities

• Western stock indices reach new all-time highs mainly driven by fundamentals. Chinese regulation weighs on emerging markets
• Positive earnings revisions in cyclical market segments as a result of the reporting season no longer trigger outperformance.
• Declining economic growth is increasingly shifting the focus to more defensive and structurally growing market segments.

Bonds

• The summer low in yields on safe haven government bonds seems to have been overcome. Duration should be kept short.
• Spreads on IG bonds offer little potential. High-yield bonds have stable spreads despite existing risks.
• In emerging markets, we favour high yielding government bonds and the local currency segment.

Alternative investments / commodities

• Spread of delta variant pushes oil price down. Existing supply shortage speaks for prices rising again.
• • Gold anticipates tighter monetary policy. With real interest rates rising, potential remains limited. Valuation: fair.
• Industrial metals suffer from concerns about an economic slowdown. Structural, positive trends remain intact.

Currencies

• The US dollar benefits from the prospect of a reversal in monetary policy. The ECB will be able to take more time.
• The British pound has slightly weakened recently. However, it remains in a narrow range at 0.85/0.86 pounds per euro.
• The Swiss franc is again benefiting from Covid-19 worries and geopolitical uncertainties.

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