Lower inflation rates are currently causing a price fireworks. In the latest Aquila Focus, Nicolas Peter, Head of Banking & Investments, interprets the current development on the financial markets.

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Independent asset managers in Switzerland are facing difficult times. Some of their portfolios are showing high losses due to market conditions. At the same time, a large number of players are assuming a further surge in inflation. What are the most recommendable asset classes now?

The environment has become more difficult for investors. For some months central banks have been tightening monetary policy. The war in Ukraine and other geopolitical tensions are compounding an already problematic situation. Not least, the war is having an inflationary impact, further boosting price levels that were already elevated due to the effect of the Corona pandemic on global supply chains. Governments are trying to stabilize economies with tax cuts, stimulus packages and support for, or outright purchases of, ailing companies.

Central bank interest rate hikes will slow economic growth significantly in coming months.
While the world economy is still in decent shape, with labor markets robust, various sentiment indicators are becoming gloomier.
Russia’s territorial losses in eastern Ukraine increase the pressure on Vladimir Putin. Russia’s recently announced partial mobilization will undermine support within Russia for its war in Ukraine.
Sharp hikes in key interest rates and the process of central bank balance sheet reduction point to an economic slowdown. Central banks aim to bring current unacceptably high rates of inflation back to target levels around 2%.
Government bond yields continue to rise, and the US yield curve has become more inverted.
Equity markets are due for another reality check. Valuations have come down significantly, but earnings estimates for coming quarters are probably still too high.
The US dollar continues to trend higher. The euro, on the other hand, is suffering from the Eurozone’s multiple problems.
Gold has come under pressure due to higher yields and the strong US dollar.

It is not only the stock markets that are showing their volatile side this year. Following the recent rise in interest rates, the bond markets are also down by double digits. So it's high time to take a closer look at this asset class in the latest Aquila Focus. Nicolas Peter, Head Investments & Banking Aquila AG, is joined by Patrik Kauffmann, Portfolio Manager at Aquila Asset Management AG.

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Jerome Powell’s speech was crystal-clear and markets are reacting.

Over the past few weeks, the stock markets have been on the rise again for the first time. Is this a good reason to rethink your equity allocation, or is it still too early? Nicolas Peter, Head Investments & Banking Aquila AG, explains the current situation on the financial markets.

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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.

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.