April 2016 || Newsletter

Investment Perspective
During March, global equity markets continued to claw back early-year losses with the MSCI World Local Index climbing by 5% thus limiting its first quarter loss to 2.5%. With a 13% monthly gain, emerging market equities outperformed significantly on the back of improving sentiment, a rebound of commodity prices and dollar weakness. The dollar effectively had one of its worst quarters in more than five years, reflected by the 3.7% drop of the Dollar Index.

This depreciation of the dollar resulted largely from the dovish comments of Janet Yellen following the March meeting of the Federal Reserve. The central bank reduced its number of expected rate hikes in 2016 to two from four previously and, as expected, rates remained on hold. Fed officials also cut their expectations for economic growth and inflation. The cautious tone of Yellen reflected more concerns about global growth rather than about domestic economic developments.

The March meeting of the ECB was also eagerly anticipated by investors. The bank did not disappoint the high expectations of the markets, with a 10bps cut of the deposit rate to -0.4% and a €20 billion expansion of monthly purchases to €80 billion. Furthermore, the bank announced that investment-grade corporate bonds would be included in the list of assets eligible for purchases. Finally, a new series of four targeted longer-term refinancing operations (TLTRO II), with a maturity of four years, will be launched, starting in June 2016.

Newsletter summary

  • The impact of currencies on equity performances
  • An eventful first quarter for US high-yield bonds
  • Key Data
  • Investment Strategy
  • Portfolio Activity/News

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