Erste Asset Management

Fiscal- and monetary policies – Update from the Investment Division

Fiscal- and monetary policies – Update from the Investment Division
Fiscal- and monetary policies – Update from the Investment Division
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What has occurred since yesterday ?

Gus Backus celebrated in the 1960s some successes in the German Pop music charts. It is remarkable that in the 50s he also scored two top ten hits in the USA. In the chorus in one of his songs he sings: “Who should pay that, who ordered that, who has so much dough, who has so much money?” Those questions are also asked by more and more investors now. As reported several times since the break-out of the pandemic, far-reaching fiscal- and monetary policy measures were announced. The volume and the speed of their announcements is without example in the economic history.

The following table shows the most important measures in the USA, Europe and Japan:

Source: Erste Asset Management, IMF; St. Louis Fed

The stimulus packages announced by the governments will lead to a strong increase of the budget deficits of these countries. Those deficits will be financed with new government debt, which will lead to the issuance of the government bonds. Already this week the US finance ministry announced the issuance of a record volume over the next two quarters (those volumes will not only be new debt, but it will be used to re-finance existing bonds.). The yields of 10Y US Treasuries increased yesterday quite moderately by ca. 4 basis points.

We do not believe at the current time that there will be a strong yield increase for investment grade bonds. Especially the decreased crude oil price and the macroeconomic demand decrease will be the cause that yields will not increase. With the central banks and their purchase programs there is also a buyer for those newly issued bonds.

The markets for risky assets kept calm yesterday. The US equity index S&P 500 closed in negative territory with – 0,7% and the European markets at ca. – 1%. Also crude oil and gold had to see losses yesterday.


Legal note:
Prognoses are no reliable indicator for future performance.



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The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011. The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the Key Information Document can be viewed in their latest versions at the web site within the section mandatory publications or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the web site A summary of investor rights is available in German and English on the website as well as at the domicile of the management company.

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Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to § 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.

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