What’s happening on the markets? In our Investment View, the experts of our Investment Division regularly provide insights of current market events and their opinion on the various asset classes.
“Higher for longer” has become the mantra of the powerful central bankers in recent months. Monetary policy is likely to remain restrictive longer than originally expected. Regardless of whether the major central banks will follow up with a final interest rate step in autumn, the interest rate peak has probably been reached and “the worst” is behind us.
In line with the surprisingly strong economic indicators in the US, government bond yields have risen significantly in recent months. This is putting pressure on the prices of many classes of securities and intensifying discussions about how restrictive interest rate policy really is. Could the higher level of yields make the central bank’s job easier in the form of further interest rate hikes?
The terrorist attack on Israel by Hamas last weekend dominates the international headlines. The markets are reacting to this with price declines, but the extent of the movements has so far been limited.
The decline in crude oil prices has led to a trend reversal in the energy market this year: while many power companies have recently raised their profit forecasts, the major oil companies suffered massively from the recent drop in crude oil prices. Meanwhile, in the effort to reach climate targets, the trend toward renewable energies continues unabate
Can price stability, i.e. inflation of 2%, be achieved without a recession? The further decline in inflation in the US in June has raised expectations for this favourable scenario. However, a look in the rear-view mirror calls for caution. In the past, a central bank-induced decline in inflation has often been accompanied by a recession.
The feared recession has so far failed to materialise and inflation is also falling. Nevertheless, the risks remain on the downside. What could be in store for the markets in the second half of the year?
The global economy grew strongly in the first quarter of 2023. At the same time, inflation remains too high, which is why central banks will continue to pursue a restrictive monetary policy. Although growth indicators are good to strong, there are therefore increased risks of recession.
Since the banking problems in the US emerged in March, share prices have risen and expectations for future key interest rates have fallen significantly. However, inflation dynamics remain the most important factor for the markets, but unfortunately also one that is difficult to assess.
The previous year was marked by unexpectedly high inflation and rapid key interest rate hikes – but what will the new year bring?
In his article, Chief Economist Gerhard Winzer presents ten topics that could be particularly relevant for the financial markets in 2023.