Portfolio May 2023

The consequences of the rapid rise in interest rates have become all too apparent over the last few weeks. In Switzerland, turbulence in the banking sector triggered the downfall of Credit Suisse. Measures taken by central banks and government brought the situation under control, and the storm abated. The economic slowdown continues to gather pace, but companies are performing well. Time to adjust the compass.

US equity markets have delivered gratifying returns in recent weeks, despite a banking crisis and deteriorating economic expectations. However, higher interest rates are likely to weigh on markets over the coming months. In our view, interest rate cuts remain an unrealistic scenario. The Fed can be expected to keep key rates high in order to counteract inflation. The situation for European financial markets looks rather different: here economic growth has proved more stable than expected.

How should investors react to this situation? Is now the time to make portfolio adjustments? You’ll find our assessment here.