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Hunt for yield is back

Dear reader
Financial markets recorded a very positive start to the new year across all asset classes. But in contrast to last year, this was not triggered by strong economic data, but rather a reaction to the massive selloff in December, when emerging fears of a recession triggered sharp price declines within a very short space of time. The soothing syrup administered by the US Federal Reserve, which suggested that it would not pursue further interest rate hikes in the short term, once again hit the sweet spot.
So what will happen next? The decline in interest rate expectations should lend further momentum to risky assets. That said, we prefer to lock in initial profits early on in the year, given the expected slowdown in growth, and favor a somewhat more cautious portfolio positioning.
Yours faithfully
Philipp E. Bärtschi, CFA
Chief Investment Officer

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