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German economy gains hope

Over the past two weeks, central bank meetings have been on the agenda and surprising decisions have been made. Meanwhile, the stock markets continued their record-breaking run, led by the Magnificent 7, while the prospect of interest rate cuts breathed new hope into the German economy. This is reflected in the surprisingly strong rise in the Ifo business climate index to a nine-month high. Companies assessed their current situation and business prospects more positively. The ZEW index, a survey of financial market analysts, pointed in the same direction. This rose to a new two-year high. While many central banks are discussing interest rate cuts, the Bank of Japan raised interest rates for the first time in 17 years and ended its experiment with negative interest rates. The yield curve control was also abandoned. The key interest rate now ranges from zero to 0.1 percent. However, quantitative easing, the purchase of long-term government bonds, has been retained. This means that monetary policy in Japan remains ultra-loose and the statements regarding further tightening in the future were extremely vague. The market responded to this with a further significant weakening of the yen.

The US Federal Reserve also made no changes to the key interest rate. This remains within a range of 5.25 to 5.5 percent. As the latest inflation figures in the US were somewhat higher than expected, the Fed is in no hurry to start the rate cut cycle too soon. The markets are currently assuming that the Fed will cut interest rates in June and that two further rate cuts will follow. Meanwhile, among the central banks, the Swiss National Bank has led the way with a rate cut, lowering its key interest rate from 1.75% to 1.5%. It will be interesting to see to what extent the SNB may have taken on a pioneering role for the ECB here. Its next meetings will take place in April and June. The faltering disinflation trend caused interest rates to rise slightly in the reporting period. Ten-year US government bonds rose to over 4.20 percent and ten-year German government bonds to over 2.3 percent. While investment-grade corporate bonds were able to escape this negative trend due to their shorter duration, there was some profit-taking on high-yield bonds. Overall, this development had a positive effect on the bond side of Moventum's portfolios. The slightly shorter duration positioning helped to reduce price losses. The focus on investment-grade corporate bonds made a positive contribution.

On the equity side, the Moventum portfolios benefited from the outperformance of the US equity market and their growth orientation, as growth stocks outperformed value stocks, at least in the USA. This was counteracted by the slight underperformance of the overweighted Japanese equity market. At sector level, the overweighting of the energy segment was advantageous, while the defensive healthcare sector was not quite able to keep up with the positive market environment. The friendly market environment for equities led to price gains in all Moventum portfolios over the past two weeks. The portfolios were able to escape the price losses on the bond market thanks to their positioning and good fund selection.

The PWM portfolio performed positively in the past two weeks, with all asset allocation components contributing to this. Among the alternatives, 7orca benefited from the decline in volatility and offset the negative performance of Aquantum's hedging fund with Plenum's Cat Bond fund. The three mixed fund strategies, which were able to participate in the positive equity market performance, presented a positive picture. Among the bond funds, the interest rate-heavy strategies had problems in the rising interest rate environment, but this was more than compensated for by the short-duration funds and credit-heavy strategies. Almost all equity funds participated in the record highs on the equity market. The Ardtur fund benefited from the positive value environment in Europe and the two GQG funds benefited from the growth outperformance in the USA. The HANSAgold fund benefited from the record highs in gold.



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