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Stable US labor market keeps the buying mood high and the economy going

After the ECB presented its first interest rate hike, the focus turned to the US Federal Reserve. As expected, it left interest rates at a high level. The "dot plot" for the median expectations of future interest rate developments was even shifted slightly upwards and only indicates a rate cut for this year. One reason for the Fed's stance is likely to have been the robust labor market report. After the disappointing report in April, the May figures surprised on the upside again. A stable labor market keeps the buying mood high and the economy going. For us, this is a reason to continue to take a constructive view of economic development.

In Europe, the focus was on political developments following the elections to the European Parliament. In a complete surprise, the French president called new elections, which are now expected to result in a landslide victory for right-wing forces. This uncertainty weighed on the markets in Europe and led to a flight into German Bunds. In this environment, the Bund yield fell by around 20 basis points and is now trading at around 2.36%. Spreads in France and the peripheral countries widened significantly. Thanks to the duration tailwind, corporate bonds with an investment grade rating were able to make significant gains, while the increase in high-yield bonds was smaller. 10-year US government bonds also fell significantly, dropping to around 4.23%. This was due to the May inflation figures, which showed a surprisingly low increase. This applied to both overall inflation and the core rate. Despite the hawkish results of the Fed meeting, the markets are therefore expecting two interest rate cuts from September.

In this market environment, the bond side of Moventum's portfolios also made clear gains. Due to their shorter duration positioning, the performance was not quite as dynamic as on the broad bond market. However, thanks to their global (currency-hedged) positioning, they benefited from the disproportionate fall in interest rates in the USA. The international equity markets rose, driven by the US equity market. The European equity market performed negatively, with political uncertainties weighing on sentiment. The Moventum portfolios are underweighted in Europe and were therefore able to escape the maelstrom of bad news somewhat. The overweighted Japanese equity market gained thanks to a strong yen from the euro investor's perspective, but underperformed the MSCI World. The emerging markets, which we underweight, also underperformed.

The general decline in interest rates led to a significant outperformance of growth stocks, which are disproportionately included in the portfolios. The portfolios were able to escape the weak performance of small and mid caps, as these have not been included in the allocation to date. At sector level, the portfolios benefited from the outperformance of the IT and communication services sectors. The overweighted healthcare sector also outperformed the broad equity market. The weak performance of the energy sector was a disadvantage.

The positive performance on the equity and bond markets in the past two weeks also benefited the Moventum portfolios, all of which recorded gains. However, the bond side suffered from its shorter duration positioning in the positive interest rate environment and on the equity side, selected exposures in the value sector had a negative impact. In addition, most funds were only able to follow the market trend driven by a small number of tech stocks to a limited extent. This was only partially offset by favorable sector positioning.

This generally friendly market environment also ensured adequate growth across the board in the PWM portfolio. Almost all portfolio components performed positively. Within the alternatives, only the Aquantum Active Range hedging fund recorded a negative performance. Mixed funds, bond funds and most equity funds benefited from the favorable market conditions. In the bond funds, the more duration-oriented products made more significant gains. Within the equity funds, growth strategies were particularly convincing. HANSAgold was unable to escape the consolidation in the gold price.

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