Our take on the economy

2023 so far

What went up

Most equity and bond markets

Swiss Franc

Investor’s confidence

What went down

Inflation

Commodity prices

Economists' mood

What made the news

Lower inflation

Central banks change in tone

China reopening

Business health

Overall, companies around the world have shown resilience so far. The long-term effect of higher interest rates and inflation are still weighing on revenues. At the same time, decreasing prices lead to more attractive valuations: equities are more affordable for investors.

Economic environment

In 2022, the economic environment changed drastically. Higher rates, lower asset prices and slower growth prospects are the new paradigm investors must deal with. While the environment remains challenging, there is also scope for more positive surprises, especially if Central Banks raise rates less aggressively.

Interest from investors

Investors are still divided when it comes to economic prospects, although we all got somehow used to the new market regime. While most economists are expecting a recession in 2023, many investors are taking advantage of lower asset prices and higher interest rates. Opinions diverge when it comes to the specific asset classes and sectors to invest in, this is good for price discovery.

What this means for investors

1

Market performance is still likely to be dictated by the actions of central banks and the pace at which inflation will retrench. Turbulences are still expected as economies are slowing down.

2

Higher interest rates affect the economy and put pressure on asset prices. At the same time, they provide opportunities to lenders.

3

Safer assets have become attractive again, and markets are offering bargains for more risky investments. It is not a bad environment for investors overall.

Victor Cianni

Chief Investment Officer

Amandine Soudeille

Associate Portfolio Manager

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