Opportunities and risks balance each other out

Economics

• US: Fed hits the brakes hard on monetary policy - mild US recession in 2023.
• High prices for natural gas hit Europe hard this winter - recession until spring 2023, recovery afterwards.
• US inflation peak reached. Euro inflation will continue to rise until the end of 2022. Price pressure decreases from spring 2023.

Equities

• Equities fell to new lows for the year. European and emerging market equities held up better than US equities.
• Value is again ahead of growth. The Q3 reporting season should provide clarity on margin pressure. Prices reflect many risks.
• We increased our equity weighting to neutral in the autumn sell-off. Opportunities and risks are already balanced.

Bonds

• Inflation concerns and restrictive monetary policy cause massive interest rate volatility. Significant rise in yields across the board.
• Corporate bonds already attractive over the long term. For emerging market bonds, we prefer local currencies.
• We maintain our less strong underweight in bonds and position ourselves close to neutral in duration.

Commodities

• Gold still burdened by central bank policy and US dollar strength. Sustained upward trend requires a turnaround by the Fed.
• OPEC cuts exacerbate supply deficit. With mild recession, significant collapse in demand seems unlikely.
• Industrial metals surprisingly stable recently. End of economic weakness holds recovery potential. Long-term trends intact.

Currencies

• The EUR/USD exchange rate has now settled below parity. The energy crisis is weighing on the euro.
• The British pound experienced some turbulent days and stabilised after a central bank intervention in the bond market.
• The franc is benefiting from the geopolitical situation, comparatively low inflation and the firm monetary policy.