Monthly Coffee Break

Equities, Monthly Coffee Break

Hawkish Fed weighed on market sentiment

European equity markets registered a significant rebound from the previous month. This was mainly driven by China’s decision to ease its zero COVID-19 policy.
Fixed Income, Monthly Coffee Break

Signs of weakening inflation

Market exuberance continued in December and through the first days of January, as risky assets posted a strong performance, once again on the back of signs of weakening inflation and the hope that central banks would strike a less hawkish tone.
Asset Allocation, Monthly Coffee Break

Temperatures rising, inflation cooling

We have started 2023 with a preference for equities over bonds, as our investment strategy turned more constructive on attractive price levels in October.
Equities, Monthly Coffee Break

Stock markets continued their recovery

After a slightly hesitant start, European stock markets continued their recovery from the October lows and ended November well into the green.
Fixed Income, Monthly Coffee Break

First true relief of the year

After a bruising first 10 months in 2022 that saw fixed income investors suffering near-record losses in most asset classes, November offered the first true relief of the year.
Asset Allocation, Monthly Coffee Break

The next stage

We end 2022 with a preference for equities over bonds, as our investment strategy became more constructive on attractive price levels at the start of the fourth quarter.
Absolute Return, Monthly Coffee Break

Don’t forget the DIVA

In 2022, the markets repriced risk premiums in financial assets, quickly adjusting to the inflation risk and to the interest rate hikes implemented by central banks that followed.
Asset Allocation, Monthly Coffee Break

Fundamental support for our constructive view

In October, we turned more constructive based on our analysis of the market configuration. This month, fundamental support provides further reasons to maintain this stance.
Fixed Income, Monthly Coffee Break

Mixed picture

October offered a mixed picture following a bruising first three quarters. The Bloomberg Global Aggregate Index was down 0.55%, driven primarily by losses in US Treasuries. However, investors in some segments of the credit markets, especially EUR HY, USD HY and to a lesser extent EUR IG did see positive performance. Most Inflation-Linked Bonds markets with the exception of the US also rallied on persistently high inflation.
Equities, Monthly Coffee Break

Recession on the horizon

European equities have rebounded over the past four weeks. The rebound was mainly driven by value stocks that have outperformed growth stocks since the last Equity Committee.
Absolute Return, Monthly Coffee Break

Relief rally heading into year-end

Although the economy continues to decelerate, equities staged a strong rebound during the month of October.
Absolute Return, Monthly Coffee Break

Race to the bottom

September was another very challenging month for investors. The market is subject to considerable uncertainty, with no clear evidence of the next step.
Equities, Monthly Coffee Break

Recession on the horizon

European equities closed September lower. In Europe, the energy crisis continued to dominate the headlines, as Russia completely halted gas flows through the key Nord Stream 1 pipeline at the beginning of the month.
Fixed Income, Monthly Coffee Break

UK gilts in the eye of the storm

After registering losses in August, there was no reprieve for fixed income investors in September. All major asset classes posted negative returns, with the biggest falls coming in UK gilts.
Asset Allocation, Monthly Coffee Break

Waiting for pivot

Short-term interest rates have been rising around the world over the past year as central banks attempt to fight inflation.
Fixed Income, Monthly Coffee Break

Negative performance across the board

After a respite in July, August saw negative performances across the board for almost all asset classes. In G10 rates, investors in Japan suffered the least (-0.97%), whilst the UK posted the largest losses (-6.36%), followed by EMU peripherals at –5.34%. EMU core markets fared somewhat better at -4.71%, but with a sizeable distance away from US government bonds at -2.73%. Breakevens were positive across the board, although barely so in the eurozone.
Absolute Return, Monthly Coffee Break

Nobody wants to fight the Fed

After a two-month period of improving risk appetite, the market started to head downwards in mid-August, influenced by the outcome of the Jackson Hole meeting. Jerome Powell’s hawkish tone obviously had a strong impact on the markets, but it was not the only strong driver. The deterioration of energy supply in Europe as we are quickly approaching winter is a cause for concern for industrial output, but also consumers, who will be facing record energy bills.
Equities, Monthly Coffee Break

The second half of the year looks challenging

Central banks’ commitment to bringing inflation under control, despite the inherent risks to the growth outlook, shook both equity and bond markets in August. While the summer brought historical droughts and heatwaves to many parts of the world, the global economy nevertheless continued to cool. All in all, the level of uncertainty about the outlook for the global economy remains high. This uncertainty is especially elevated in Europe, where after six months of war in Ukraine, there is no sign of a ceasefire, and where a recession seems increasingly likely this winter as the region’s energy crisis continues to intensify.
Asset Allocation, Monthly Coffee Break

Caution, hot

This year’s European summer heatwave and drought has the potential to worsen the current energy crisis, as river water levels have dropped significantly.
Absolute Return, Monthly Coffee Break

The year of the bear

As the investment community was slowly preparing for a well-deserved summer break, a higher-than-expected US CPI read revived fears that a recession might be around the corner. Uncontrolled inflation is pushing central bankers to continue raising the cost of capital, as the Fed did at its June meeting.
Absolute Return, Monthly Coffee Break

Drawing a line in the sand

Markets remain nervous, as investors perceive the Fed as being behind the curve in taking control over inflation. Rising prices are biting into consumer sentiment and savings, leading to decreasing growth expectations.

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