Horizon Handout August 2021

Economics

• The economy in the Eurozone is picking up. The inflation rate is still moderate at 2%.
• Inflation is currently in the spotlight in the US. Both overall and core inflation are rising strongly.
• Despite the rising inflation rates, central banks continue to maintain their support. Fiscal policy is also providing support.

Equities

• Strong Q2 reporting season, analysts have increased earnings estimates for all regions and, in particular, Europe.
• Equities remain expensively valued compared to its own history, especially in the US. However, there is no attractive alternative.
• We expect a volatile sideways movement over the summer with little upside potential at index level.

Bonds

• Safe government bonds have recently seen falling yields as well as flatter yield curves.
• Euro corporate bonds: avoid duration risk, current yield more attractive at the short end.
• In emerging markets, we favour high-yield government bonds and the local currency segment.

Alternative investments / commodities

• OPEC production expansion is only a burden in the short term, focus should return to supply shortages in the medium term.
• Short-term decoupling of the gold price from real interest rates, persistent ETF outflows prevented a strong recovery.
• Declining economic upswing momentum caused a short-lived correction in the industrial metals in July.

Currencies

• The US dollar is strong - at least temporarily - and the euro lacks momentum. The ECB is also contributing to this
• The British pound continues its sideways trend after the bearish first quarter.
• The euro's jump from 1.08 to 1.11 in the first quarter is a thing of the past - the franc has fought its way back

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