Outlook
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Watch the video with Benjamin Melman, Global CIO Edmond de Rothschild AM

It was a busy week for macroeconomic data but central banks had a field day announcing their last policy decisions for the year.

Shanghai’s composite index rebounded sharply from 13-year lows on hopes China would reopen more rapidly than expected.

Demonstrations in China against Covid restrictions initially worried investors but government support for property companies and an apparent move towards gradual easing of sanitary conditions helped calm nerves.

Falling government bond yields in the US and Europe helped equity markets consolidate recent gains.

Falling government bond yields in the US and Europe helped equity markets consolidate recent gains.

As the end of 2022 approaches, various encouraging elements have disrupted the prevailing gloomy outlook: China has started easing its zero-Covid policy, the global economy may be decelerating but is less depressed than expected, gas prices everywhere have fallen sharply and inventories look high enough to get us through winter. Above all, there are incipient indications that US inflation is turning lower.

After enjoying a sharp rebound in October, risk assets started November in a hesitant mood ahead of the consumer price index in the US.

The “R&D/Sales” ratio for our Healthcare strategy reaches 25%, compared to only 14% for its benchmark.

Edmond de Rothschild is strengthening its activities dedicated to family offices with the appointment of Jean-Nicolas Schweigert as Head of partnerships with financial intermediaries in France.

At last Wednesday’s FOMC, Jerome Powell managed to shake investor confidence while pivoting to slower rate hikes in the future.

The Fed will slow the pace of rate rises but expects a higher terminal rate than markets expected, and for longer.

Two events led investors to consider that political risk in Europe had fallen back. First, Rishi Sunak became the UK’s prime minister and second, the new government in Rome included a finance minister viewed as pro-Europe. Government bond yields in Europe then retreated and sterling and the euro gained against the dollar. The feeling is that governments now seem to realise they have less room to manoeuvre over budgets now that financing costs have risen.