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Further signs of a soft landing for the US economy

The equity and bond markets have continued their positive performance over the past two weeks. Market participants are assuming that the signs of a soft landing scenario for the US economy have intensified. The disinflationary trend is intact, as shown by the lower than expected rise in inflation figures in the US. According to the market narrative, this gives the Fed the opportunity to cut interest rates in spring 2024.

The futures markets are already pricing in a total of four interest rate cuts for 2024. The price of oil is also providing little disruptive fire for inflation at the moment. Despite the war in the Gaza Strip, it has continued to fall. The ZEW index indicates a glimmer of hope for Germany: The sub-index for the outlook for the German economy rose more strongly than expected and is back in the positive range. The economic downturn in Germany could therefore have reached its lowest point. Support for the global economy is also coming from China. The economy there is continuing to stabilize, as the figures for retail sales and industrial production indicate. The government is also further strengthening its fiscal support measures. The expectation of interest rate cuts in the near future led to falling yield levels and significant price gains for bonds. Government bonds performed best and the credit segments were generally unable to keep pace with their price performance due to their shorter duration.

In view of the longer duration positioning at the beginning of the quarter and the stronger focus on government bonds, Moventum portfolios on the bond side were able to participate well in this development. On the equity side, all major markets performed positively. This was also driven by the results of the current reporting season, where some larger companies were able to surprise positively and there were no negative disruptive factors. However, the outlook for many companies was moderate and there was talk of weak demand. We therefore remain vigilant with regard to a future recession.

At regional level, the European stock markets recorded the biggest gains. Investments in the USA suffered from the weaker US dollar from the euro investor's perspective. The Japanese equity market, where the Moventum portfolios have their largest overweight, recorded the smallest increase. Emerging markets also underperformed, suffering from the negative performance of the Chinese stock market. As we expect the situation to stabilize soon, we will remain invested in these markets for the time being.

At style level, the growth segment was ahead. The portfolios are invested in this segment via selected funds and were able to benefit. The growth outperformance also ensured an above-average development for technology shares. Defensive healthcare stocks - an area that is highly weighted in the portfolios as an anchor of stability - continued to be out of demand. The favorable environment for equities and bonds led to price gains in all strategies in the Moventum portfolios. However, the overall more defensive positioning on the equity side meant that the portfolios only partially participated in this compared to standard market indices. On the bond side, it was not possible to fully participate in the rapid decline in yield levels, as the exposure to volatility reduction also continues to include money market-related strategies.

The PWM portfolio performed positively in the reporting period (06.-17.11.2023), which was broadly supported by corresponding performance contributions from all portfolio components. The market environment benefited the bond and equity funds, all of which performed positively. Comgest Growth Europe led the way, benefiting from the outperformance of Europe and the growth segment. Positive contributions also came from most mixed funds and the convertible bond fund. Cat bonds made a positive contribution to the performance of the alternatives. The 7orca Vega Return option strategy also benefited from declining volatility levels. Aquantum's hedging strategy showed a slightly negative performance in the positive market environment. The focus was not on gold investments, which is why HANSAgold fell slightly.



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