04 / 22


Equity markets were unable to continue their recent recovery. Concerns about inflation, the Ukraine war and the problems in global supply chains exacerbated by China's lockdown weighed too heavily. Although overall Q1 2022 earnings growth is slightly ahead of expectations, growth is the lowest it has been since Q4 2020. Price pressures at producers are often passed on to consumers through price increases. This does not bode well for economic growth. Supply chains and inflation play a huge role in reporting and continued price pressures leave central banks with no choice but to normalize monetary policy from historically low absolute interest rates. In addition to normalization starting from record low policy rates, it could also occur at a pace never seen before. At hardly any time in history has the U.S. Federal Reserve raised interest rates at such a rapid pace as is being anticipated today. The Fed's next meeting is this Wednesday and a 50 basis point increase is expected. Even the publication of surprisingly weak economic growth for the first quarter of 2022 is unlikely to change this, as inflation fears now definitely dominate. The ECB, on the other hand, is trying to postpone the unpleasant truth even further and continued not to implement any increase on the occasion of the interest rate decision in April. This is despite record high inflation in the euro zone - the fear of a next euro crisis is too high. The coming months will show whether the ECB's bet on the base effect will pay off - the pace of inflation is likely to slow from the summer onwards due to the base.

Equity Markets

The U.S. technology stock market posted its worst month since the great financial crisis of 2008, with rising interest rates, supply chain problems and inflation definitely eating into the business figures. Online retailer Amazon.com suffered badly from increased costs and posted a loss of USD 3.8 billion for the quarter - the stock lost 23.75% in April. Apple, which had not shown any disappointment in quarterly figures for a long time, was also unable to deliver a satisfactory outlook for Wall Street due to supply chains - despite revenue and profit that were well above expectations. Apple lost 9.7%. Alphabet (Google) suffered from the impact of the Ukraine conflict (-17.7%). The withdrawal of the Russian business and stricter requirements in the EU caused weak advertising revenues. Netflix's stock market value halved in April after the streaming service provider reported surprisingly declining subscribers. A small bright spot was Meta Platforms (Facebook), which regained some ground after recent heavy losses thanks to increased user numbers. The Nasdaq 100 lost 13% and the broader S&P500 8.8% in April, while Swiss markets were in place and the EuroStoxx50 gave up about 3%. In Asia, China's market lost 5% in a volatile month despite verbal intervention and government support. The massive weakness of the Japanese currency did not help the Nikkei 225 (-3.5%).

Interest Rates

There was no sign of a trend reversal in interest rates. In the USA, the yield on 10-year bonds is almost 3%, and in Switzerland, the 10-year Swiss government bond is now yielding 0.9% p.a. again. With the exception of Japan, the yields on global government bonds have thus continued to rise. Japan's central bank is one of the few that continues to massively stimulate and manipulate the yield curve. With unlimited purchases of government bonds, it continues to defend the yield level on 10-year bonds at 0.25%. This extreme contrast has led to massive JPY weakness in the global currency context. With inflation not abating, the market is already expecting over 9 rate hikes this year in the US and one in the Eurozone.

Currencies / Commodities

The Japanese yen fell to a twenty-year low and the EUR touched the 1.05 mark against the USD. The Swiss franc lost over 5% against the USD. Not without certain dangers, SNB President Jordan also hopes that inflationary pressure will only be temporary. The fact that official inflation expectations in Switzerland have so far risen much less sharply could at best give the SNB some monetary policy leeway in its "currency policy". The pressure for intervention is likely to ease in this scenario. Even in the medium term, interest rate hikes by the SNB are only conceivable as a reaction to interest rate steps by the ECB.


Corporate earnings show that the issues of inflation and supply chains have left a strong mark. These headwinds do not appear to be abating in the immediate future, so our outlook remains highly cautious, even though industry survey data still point to expansion (see FOKUS). Central banks are trying to tame inflation and are thus contributing significantly to worsening financial market conditions. For the time being, we are therefore tactically sticking to a lower equity allocation and an overweight in liquidity. On the positive side, we could mention investor sentiment at this point, but this alone is often not a reliable signal - as long as there is no panic, the negative sentiment may last longer before a contrarian buying point is likely to emerge.


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