The Strategist

Switzerland’s economy showed its relative strength, rebounding in the third quarter despite its major, neighbouring trading partners falling into contraction during the same period. US and European stocks were up to end the week, while Asian equities were mixed on Monday. Gold exploded to a new...

The narrative that peak interest rates have been reached by the world’s central banks gained credibility on Thursday following a series of weak economic releases out of the US and Europe. Stocks in the US traded mostly higher. European equities made gains while the euro came under pressure...

The growth rate of the US economy in the third quarter was revised upward on Wednesday to 5.2% from a previous figure of 4.9% when compared with the same quarter a year earlier. Wall Street initially traded strong following the data release before losing most of its gains and closing mixed.

The downward trend in German consumer sentiment seems to have hit a bottom for the moment as forecasts for December ticked up a bit. The data is good news for Europe’s largest economy which has struggled this year and slipped back into economic contraction in the third quarter. Most European...

Concerns about whether the Federal Reserve (Fed) had really finished its interest rate hiking cycle returned to markets to start the week. Traders are hoping to find clues about the Fed’s monetary policy direction in US Personal Consumption Expenditures (PCE) data due on Thursday. Stocks in...

Businesses in Germany were more optimistic this month than last despite the economy slipping into recession in the third quarter. While equity markets in Europe and the US ended last week with mostly small gains, Asia stocks started off Monday’s session in the red. Gold was trading up at around...

Some key Purchasing Managers’ Indices (PMIs) out of Europe beat market expectations on Thursday despite most remaining in contractionary territory. The positive surprise in European macroeconomic data helped European stocks to close higher on Thursday while Asian stocks were mixed at the end of...

Stocks in New York saw gains on Wednesday, the last trading session before the long Thanksgiving holiday weekend. Yields on ten-year Treasuries were down while the US dollar Index slipped. In Asia, stocks were also trading mostly in positive territory on Thursday.

The conflict in Israel was seeing some movement this week with the Israeli government agreeing with Hamas on a four-day fighting pause. A total of 50 hostages will be released from Gaza as well as 150 Palestinians held in Israel. Humanitarian aid will also be allowed into Gaza. While the...

Wall Street saw a strong trading session to start the week and Asian stocks were likewise mostly higher on Tuesday as the narrative set in that the Federal Reserve (Fed) is likely done hiking interest rates and may even begin cutting rates as early as the spring. Yields on ten-year US...

The Fed and the ECB will have to maintain their tight monetary regimes for longer. In the absence of an unexpected recessionary dynamic, decisive central bank rate cuts are therefore unlikely in the first half of 2024. Following the sharp rise in government bonds, we have decided to reduce our...

As we get closer to turning points, both on the economic growth and on the monetary policy sides, uncertainty reaches its peak. Geopolitics have come on top of this already uncertain environment, compounding a challenging combination of high bond yields and slowing economic growth. Higher...

Like the two characters waiting for Godot in Samuel Beckett’s play, many market participants have been waiting for a recession in the United States, which may never come. Many experts assumed that US economic growth would be much weaker this year than it has been so far. And most of them have...

Risks to economic growth dynamics have increased, triggering a downgrade of emerging markets against an upgrade of the more insulated US stock market, now both "Neutral". In Fixed Income we expect the interest rate environment to remain at elevated levels for longer. In our current House View...

Global growth weakness is likely to continue well into autumn, but the US economy has shown remarkable resilience. The stabilisation of the macroeconomic environment has led us to increase the global equity allocation to “Neutral”. On a tactical basis, we are starting to take profits in gold...

As the second quarter of 2023 draws to a close, the longest day of the year is already behind us in the northern hemisphere. For investors, the question now is whether the third quarter will follow on seamlessly from the first two. In the coming weeks, capital markets and investors will have to...

The political dispute over raising the debt ceiling in the US has been at the centre of attention on the financial markets in recent weeks. With the agreement now reached to raise the debt ceiling for two years, which still has to be approved by parliament, the risk of a default by the world’s...

At a global level, we do not expect a recession this year, but economic growth will remain below potential. Developments across the regions are mixed. On this backdrop, we maintain our defensive investment strategy across all asset classes, but the underweight in equities is reduced by building...

The Federal Reserve is considering to end the monetary tightening cycle, but it has no intention to cut interest rates - markets take a different view. Equity investors are currently better compensated in Europe than in the US, therefore we upgrade European equities to “neutral”. The banking...

Any rate cut fantasies seem to have fizzled out and investors have a more realistic view of the Federal Reserve's rate path again. Within the equity quota, we recommend a defensive positioning and prefer the "rest of the world" to the US. After the correction, we are raising gold in the...

Once it became clear that the pressure on policy rates at the short end of the yield curve was likely to ease as a result of fewer rate hikes to come, the focus shifted more to rates at the long end from mid-2023 onwards. Factors such as a solid economic performance and robust labour market...

The corporate earnings season for the third quarter can be considered disappointing overall. In the US, however, there is at least growing hope that the worst of the earnings recession may be over, while Europe is lagging behind this trend.

How do a tight interest rate regime and a stable economy fit together? A glance into the past reveals that the delayed impact of interest rate hikes on the economy is rather a rule than an unusual occurrence.

The Middle East, always a flashpoint of geopolitical tensions, is not only in the world’s media spotlight following the Hamas attacks on Israel and the subsequent Israeli ground offensive but is also causing ongoing nervousness in the capital markets. While immediate events dominate the...

In the early morning hours of Saturday, 7 October 2023, Hamas launched a large-scale terrorist attack on Israel. The humanitarian costs of these tragic events transcend any financial market considerations. Below, we endeavor to provide as objective an interim assessment and evaluation of the...

The recent attack on Israel by Hamas and the subsequent retaliation have significant economic and financial implications for the region. The conflict could have far-reaching consequences, particularly in the context of economic relations and global financial markets.

The US government avoided a shutdown for the time being, but faced a political battle within the Republican Party that led to the ousting of Speaker Kevin McCarthy. Ongoing budget disagreements and leadership uncertainty raise the risk of a government shutdown, adverse economic effects and a...

After a relentless rise over the past 18 months, it seems like key interest rates may finally be close to peaking. At least that is what it looks like after the latest round of key Western central bank rate-setting decisions.

China’s economy faces multiple challenges ranging from problems in the housing and banking sectors, in addition to overall economic performance. Actions taken by the authorities range from traditional monetary easing to macroprudential measures, including adjustments to mortgage and deposit...

Subordinated bank bonds are once again in the spotlight after Zürcher Kantonalbank skipped a call option. The decision led to price losses in the Swiss franc denominated AT1 segment.