Monthly Coffee Break

Asignación de activos, 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.
Renta fija, 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.
Renta variable, 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.
Retorno absoluto, 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.
Retorno absoluto, 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.
Renta variable, 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.
Renta fija, 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.
Asignación de activos, 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.
Renta fija, 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.
Retorno absoluto, 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.
Renta variable, 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.
Asignación de activos, 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.
Retorno absoluto, 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.
Retorno absoluto, 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.
Renta variable, Monthly Coffee Break

EQUITIES: Global markets stabilised somewhat in May

Global equity markets stabilised somewhat in May after the significant correction since the beginning of the year. However, there are not a lot of new elements to digest. The Fed walked the talk and increased its rates.
Renta fija, Monthly Coffee Break

Geopolitical tensions continue to weigh on investor sentiment

The performance of financial markets improved in May, with US markets posting a positive performance for the first time this year. Equities rebounded from their lows of May 19th and the greenback weakened while EUR/USD rebounded towards 1.07.
Asignación de activos, Monthly Coffee Break

Prepare for landing

The multiple shocks experienced so far in 2022 have led to a rare simultaneous decline in equity and bond values. As uncomfortably high inflation leads major central banks to tighten monetary policies, investors are preparing for the landing of the global economy.
Asignación de activos, Monthly Coffee Break

Tightening into the slowdown

The reasons for a prudent allocation have not changed in recent weeks: facing high inflation, central bank rhetoric and policy tools have triggered a tightening in financial conditions while the global economic slowdown is now well underway, as the war in Ukraine and Covid-related lockdowns in China weigh on confidence and activity.
Monthly Coffee Break, Retorno absoluto

Brace for impact

There are currently so many headwinds to the economy that it is difficult to isolate THE driver that is having the biggest impact on deteriorating economic fundamentals in only a small paragraph.
Renta fija, Monthly Coffee Break

High volatility

The performance of the fixed income asset class was impacted by geopolitics, the rise in inflation and the generally hawkish stance of central banks.
Asignación de activos, Monthly Coffee Break

Accelerating towards the cycle end

Exiting the pandemic, entering the war and tightening monetary policies around the globe are acting together as a formidable business cycle accelerator.

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