Horizon Handout December 2021

Economics

• The upswing was slowed down in autumn by supply bottlenecks and new Covid-19 uncertainties.

• Inflation continues to rise - in the US, Europe and Germany. Central banks begin to take countermeasures.

• While the US Federal Reserve is tightening monetary policy, the ECB remains hesitant.

Equities

• Many stock markets hit new all-time highs. Chinese equities remain volatile but seem to be stabilising.

• Corporate profits are expected to increase again next year, but growth rates are expected to decline.

• We remain constructive on equities. However, the risk of a technical countermovement has increased recently

Bonds

• Yield pressure due to stagflation concerns (high inflation, low growth) led to a flattening of the yield curves.

• Spreads on EUR credit are at an unattractive level. EM high-yield bonds have increased spreads.

• We underweight bonds and focus on credit risks and off-benchmark themes. Duration: short.

Alternative investments / commodities

• Oil prices face headwinds. Debate on oil reserve releases and Covid-19 concerns put an end to the oil price rally for now

• Precious metals such as gold and silver reacted to continued high inflation and were thus able to make significant gains.

• Industrial metals are taking a breather after a strong annual performance. However, the structural trend remains intact.

Currencies

• The US dollar is once again in full gear. High inflation raises expectations of faster rising US interest rates.

• Even though the Bank of England was hesitant at its last meeting, the British pound is picking up speed again.

• The Swiss franc continues to push upwards. The ‘wait-and-see’ attitude of the ECB weakens the euro exchange rate.