A difficult first half-year is over. Practically all asset classes show a negative performance in the sixmonths to end-June. Central banks face tough policy decisions, the effects of which could be troublesome for capital markets.

Nicolas Peter, Head of Banking & Investments, looks back at the first half of 2022 in the latest Aquila Focus and explains Aquila's tactical investment strategy for the coming weeks.

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While the probability of a recession is increasing we don’t think this will occur until at least next year.
Growth momentum continues to weaken, but only slightly. There are no signs as yet of any weakening in the labor market.
Inflation will remain well above central banks’ target levels for longer, becoming a burden for companies.
In the face of high inflation central banks are increasingly prioritizing their mandate of price stability and are raising key interest rates sharply.
The ECB is working on a new package to support peripheral Eurozone countries.
Interest rate hikes by the Fed and other central banks have made the bond markets nervous.
However, the likely rise in interest rates has now, in our opinion, been sufficiently priced into yield curves.
The mixture of high inflation, rising interest rates and a possible recession is a toxic environment for the stock markets.
The USD is performing inconsistently but gold remains resilient.

The far-reaching changes in the monetary policy of some major central banks have not left independent asset managers in Switzerland unscathed. They have significantly lowered their expectations for the next three months.

While the Fed raised rates aggressively in line with its previous communication to markets, the SNB surprised with a 0.5% rate hike. And the ECB is still looking for a solution to its Gordian knot – the fragmentation under pressure of markets within the Eurozone.

Was last week's stock market reaction a trend reversal or merely a bear market rally? In the new episode of Aquila Focus, Nicolas Peter, Head of Investments, identifies three reasons for the current easing in the financial markets and provides an outlook.

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The combination of a tighter monetary policy by the U.S. Federal Reserve and sales in U.S. government bonds from Japan are increasing the pressure on U.S. interest rates. Effects on the stock markets cannot be ruled out.

The rise in bond yields continues unabated, but the pressure should slowly ease. In the current issue of Aquila Focus, Nicolas Peter, Head of Investments, explains the positioning and looks at the reporting of US companies.

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In view of the conflict in Ukraine we have reduced our estimate for global economic growth this year to 3.5%.
The tragic situation in Ukraine is weighing on markets and on the mood of investors. It is impossible to forecast with any confidence how the conflict might develop.
Assuredly, one consequence will be an additional surge in inflation, which will hit Europe in particular. Consumption and living standards will suffer.
Quarterly/annual corporate statements continue to be mostly encouraging. But inflation concerns are increasingly being highlighted.
The U.S. yield curve is now very flat, even inverted in some sections. Credit spreads on corporate bonds have widened significantly since the beginning of the year.
The stock markets are unsettled by interest rate fears and the war in Ukraine.
The US dollar and the Swiss franc act as "safe havens".
Commodity prices increased, in some cases significantly.

The Fed's announcements led to a partial inversion of the U.S. yield curve. In the new issue of Aquila Focus, Nicolas Peter, Head of Investments Aquila, interprets the reaction of the financial markets and explains the FED's announcement that it will continue to raise the key interest rate by a quarter of a percentage point at the next six meetings.

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The majority of independent asset managers in Switzerland regard the current bear market as a buying opportunity, as a recent survey by the Aquila Group shows. The experts see the greatest upside potential in gold - due to the geopolitical situation.

The U.S. Federal Reserve raised the key interest rate by 25 basis points on Wednesday and held out the prospect of six more interest rate steps this year.