June 2017 || Newsletter

Investment Perspective

May was another positive month for global equity markets whereas the dollar remained under pressure and government yields declined. US equity indexes ended the month at record levels, emerging markets continued to outperform while European equity markets took a breather following a period of strength. As largely expected, the centrist candidate Emmanuel Macron was elected French president and it was a case of “sell on the news” as European equities peaked immediately following the second round’s outcome.   

Continue Reading

May 2017 || Newsletter

Investment Perspective

The month of April got off to a difficult start for risk assets before ending on a very positive note. Following a strong first quarter for equities, investors turned more cautious in view of rising U.S. tensions with North Korea, Syria and Russia, and concerns about the French presidential elections. Gold, Treasuries, Bunds and the yen were well bid while volatility spiked as the VIX Index reached levels last observed after Trump’s election last November. However, these trends were quickly reversed and volatility collapsed to a ten-year low. Better-than expected first-quarter earnings reports and the first-round results of the French elections were the main drivers for strong equity gains during the last week of the month.    

Continue Reading

Apr. 2017 || Newsletter

Investment Perspective

The modest percentage changes recorded by certain asset classes during March fail to tell the whole story. In particular, significant movements were observed during the month within the bond and FX markets. For example, the 10-year US Treasury yield climbed from 2.39% to 2.63% on March 13 before retreating back to its start-of-month level. This was largely due to the Federal Reserve appearing as less hawkish following its March decision to hike rates by 0.25% to a new 0.75% - 1% range. 10-year Bunds followed a similar path as they spiked from 0.21% to 0.48% to end the month at 0.33% as investors reacted to the minutes of the latest ECB meeting. The dollar also experienced a rollercoaster ride as it consistently lost support until recovering at the tail-end of the month.    

Continue Reading

Mar. 2017 || Newsletter

Investment Perspective

The trends observed in February were clearly entrenched, with global equity prices moving higher, bond yields declining and the dollar recovering some of its early year losses against other majors.

Equity markets continue to be driven by an improving economic environment, higher inflation expectations and anticipations of supportive policies by the Trump administration. Despite concerns about the timing and implementation of these new US policies and rising political risks in Europe, the levels of volatility have remained close to record lows. This is reflected by the reading of the CBOE Volatility Index which is currently about 25 percent below its five-year average.        

Continue Reading

Feb. 2017 || Newsletter

Investment Perspective

Markets are having a bit of a rest after quite a steep climb at the end of 2016.

However, many trends observed since the beginning of the year have been in contrast with consensus expectations; emerging market equities have distinctly outperformed, the dollar has lost ground and gold has had a solid month on the back of a weaker dollar and stable US bond yields.

The most significant of all the market moves that took place during the past month was the rise of yields on euro-region bonds.

2017 has started on a positive note for our portfolios, thanks not only to the contributions from equities but also from our fixed-income allocation, which has been largely immune from the rising yields observed in Europe.

Continue Reading

Dec. 2016 || Newsletter

Investment Perspective

November was an eventful month for financial markets following the election of Donald Trump as the next US president. Following an initial shock and a strong bid for safe haven assets as soon as the results were first announced, the ensuing reaction of the markets turned out to be as unexpected as Trump’s victory itself. 

Continue Reading

Nov. 2016 || Newsletter

Investment Perspective

October proved to be a relatively quiet month for equity markets with the MSCI World Index declining by 0.8%. Weaker currencies contributed to the outperformance of European and Japanese equities over US ones during a period of widespread dollar strength. However, the main trend observed during the past month was the pick-up of bond yields, resulting in above-average price movements for the asset class. Highly-rated sovereign debt and credit were the most impacted fixed-income market segments, reflected by the 1.7% drop of the Citigroup Euro Broad Investment Grade Index. Investors appear to be taking account of the fact that the main central banks have reached the limits of their unprecedented policy actions and that record low yield levels are no longer sustainable.

Continue Reading

Oct. 2016 || Newsletter

Investment Perspective
During a month where global equities ended largely unchanged, the policies of Central Banks continued to be the main drivers of the markets’ behaviour in September. Following a positive start to the month, equities retreated after ECB President Mario Draghi disappointed investors by keeping the bank’s policy unchanged and by not committing to more stimulus once the current QE program expires in March 2017. Draghi gave the impression that the ECB had largely fulfilled its mandate as he urged governments to help out with looser tax and spending policy and economic reforms. Stocks were also hurt by the weakness of the European banking sector following the news that the U.S. Justice Department was claiming $14 billion from Deutsche Bank to settle a probe related to the subprime mortgage crisis in 2008.

Continue Reading

Sept. 2016 || Newsletter

Investment Perspective
The main trends observed during a quiet month of August were the extension of the tightening of credit and emerging market debt spreads, the strong rebound of oil prices and for developed markets’ equities to remain range bound; the equities of emerging markets also continued to outperform on the back of positive inflows. In contrast, the US dollar proved to be quite volatile. Following a weak start to the month, the dollar rallied as expectations of higher US interest rates were boosted by comments from Fed Chair Janet Yellen and Vice Chairman Stanley Fischer at the end of the month.

Continue Reading

June 2016 || Newsletter

Investment Perspective
The month of May was proving to be quite uneventful as major equity markets evolved in a trendless manner within tight ranges. However, at month-end, they were shaken out of their lethargy by the realization that the Federal Reserve could well raise interest rates as early as June. This contributed to a positive end to the month for global equity markets and to additional gains for the dollar, while gold continued to slide and Treasury yields moved higher. The developed equity markets registered modest monthly gains while the prospect of higher US interest rates hurt the assets of emerging markets.

Continue Reading