September 2018 || Newsletter

Investment Perspective

August was a mixed month for global equity markets as the MSCI World Local Currency Index’s 1.1% gain was only the result of higher U.S. equity prices; in contrast, the Euro Stoxx 50 Index lost 3.8%, the Topix 1% and the MSCI EM Index 2.9%, in dollar terms, due to concerns about the ongoing trade dispute and the stress in emerging markets. This higher aversion to risk was also reflected by the significant strength of the Swiss franc, which appreciated by 2.9% against the euro, and by lower yields on U.S. Treasuries and Bunds. Emerging market bonds were badly impacted by EM currency weakness, with the J.P. Morgan EMBI Global Spread Index widening by 46bps to 400bps.

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August 2018 || Newsletter

Investment Perspective

July was a strong month for global equity markets as the MSCI World Local Currency Index gained 3.1%, with positive performances recorded across most regions. Concerns about the trade war took a back seat as investors focused on the supportive reporting of second quarter earnings, especially in the U.S. This higher appetite for risk assets was also reflected by the rise of sovereign debt yields, with that of the 10-year U.S. Treasury note moving back close to 3%, and gold continuing to drift lower.       

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June 2018 || Newsletter

Investment Perspective

May was eventful as an early-month rally of equity markets was derailed by a flare-up of political and geopolitical risks, with Italy being in the eye of the storm. Safe haven assets, including U.S. Treasuries, Bunds, the Swiss franc and the yen, rallied whereas the ongoing appreciation of the dollar accelerated. Emerging markets’ assets remained under pressure due to a mix of rising Treasury yields, a stronger dollar as well as idiosyncratic issues in countries such as Turkey and Argentina. Global financial markets were also impacted by geopolitical headlines related to the tensions over trade between the United States and China, the U.S. pull-out from the Iran nuclear deal and the holding or not of the U.S./North Korea summit.

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May 2018 || Newsletter

Investment Perspective

A number of trend reversals were observed during April as European equities outperformed and as the dollar started to rebound; G-7 sovereign debt also returned to its early-year trend of rising yields, with U.S. Treasuries recording the steepest moves. When looking at year-to-date returns of regional equity indices, European equities have more than made up their underperformance relative to U.S. and emerging markets. Part of this catch-up can be explained by the rebound of the dollar, which appreciated by 2% against the euro during April. Japanese equities also performed well during the month as the Topix Index gained 3.6%, helped by the 2.8% depreciation of the yen vs. the dollar.

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April 2018 || Newsletter

Investment Perspective

March was another tumultuous month for equity markets, which have moved from an early-year state of euphoria to a state of confusion. With a lack of news related to the profitability of companies, stocks have been hurt by concerns about a trade war, reshuffles within the White House and a series of negative developments relative to the technology sector. Maybe surprisingly, defensive assets have not benefited that much from the volatility of stock markets; gold was virtually unchanged, government bond yields have drifted only a little lower while the Swiss franc and the yen, the perennial safe haven currencies, barely varied over the month.

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March 2018 || Newsletter

Investment Perspective

Financial markets were shaken out of their comfort zone in early February as global equity markets were severely impacted by a sudden spike of volatility and by fast-rising bond yields. Even if these factors were the main reasons for the turbulence of the markets, it is fair to affirm that equity markets were ripe for a correction as they had become extremely overbought and had been boosted by massive inflows during January.

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February 2018 || Newsletter

Investment Perspective

Global equity markets got off to a spectacular start in 2018 as investors poured into equity funds at a record pace. In contrast, government bond markets have remained under pressure with yield curves gradually shifting higher and also steepening. The end-2017 weakness of the U.S. dollar against most currencies accelerated throughout January, reflected by a monthly drop of 3.3% for the dollar index.

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December 2017 || Newsletter

Investment Perspective

November turned out to be quite eventful, especially when compared to the relatively quiet previous months. The performances of equity markets across the world were far from being homogeneous; US equities hit new records, emerging markets ended flat and European equities lost ground, due to the impact of an appreciating euro. Short-lived stress was observed in both the US and European high-yield bond markets whereas Chinese assets were affected by authorities’ efforts to limit levels of debt. Finally, the high-flying technology sector was impacted by a late-month sell-off. Profit-taking and a switch into sectors seen benefiting the most from the potential reduction in the US corporate tax rate were behind this correction of tech stocks..

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November 2017 || Newsletter

Investment Perspective

October was another strong month for global equity markets as the MSCI World Index gained 2.5% in local currencies. The ongoing rally was primarily sustained by positive economic data, robust third quarter corporate earnings and a dovish European Central Bank. Rising expectations for US tax cuts and a general election victory by Japan PM Abe also contributed to the supportive environment for risk assets. The US dollar extended its September rebound and appreciated versus all the other major currencies. Bond yields edged lower in the Eurozone while the yield on 10-year Treasuries ended the month only four basis points higher than at the end of September.

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October 2017 || Newsletter

Investment Perspective

The trends observed during September were not necessarily those anticipated by many seasoned market investors and commentators. A rise of volatility and a correction of equity markets had often been put forward but the end result was a good performance of equity markets and volatility close to record lows. Bond yields trended higher while the US dollar finally managed to regain some composure as it rebounded against most currencies. Within the equity asset class, European equities clearly outperformed, for the first time since April. Emerging market equities were impacted by some profit-taking and the recovery of the dollar. The dollar was also a headwind for gold as were the rising real interest rates.

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