In Switzerland, the long phase of negative interest rates has thus come to an end. However, the cycle of rising interest rates is not yet complete.
The rise in interest rates is accelerating. Central banks are tightening interest rates further. In September, the European Central Bank (ECB), the US Federal Reserve (Fed) and the Swiss National Bank (SNB) each increased their key rates by 0.75 percentage points. In Switzerland, the long phase of negative interest rates has thus come to an end. However, the cycle of rising interest rates is not yet complete. We can indeed expect further rate hikes in the coming months.
The risks of recession are increasing. Leading economic indicators point to a further slowdown in economic activity. High inflation, rising interest rates and geopolitical developments continue to create uncertainty, which is increasingly reflected in the behavior of investors and consumers. The risks of recession have therefore increased.
Financial markets are under pressure. Financial and capital markets are struggling to regain calm. The sharp rise in interest rates led to a correction in the value of almost all investment categories. In September, the stock markets were once more under pressure. The close-up of this issue illustrates the effects of interest rate swings on the economy and financial markets.
Defensive positioning. The current context is marked by uncertainties and we therefore expect continued high market volatility. In this context, it is recommended to have a defensive tactical approach. We are underweight both bonds and equities. Along with a higher cash quota, we still recommend diversifying into gold and Swiss real estate funds. When selecting, the focus should be on quality, quality and more quality.
Opportunities in sight. In our view, the stock market correction is well advanced. Investors should therefore stick to their investment strategy. In addition, one should also keep an eye out for investment opportunities. Bonds are generating positive returns for the first time in a long time and some stocks have also reached attractive valuation levels in the meantime. The best investment opportunities always present themselves when a crisis reaches its peak. And that time is getting closer.
