Following 18 strong summer weeks, the stock markets corrected by 5% in August. China in particular created uncertainty due to weak economic data and payment problems with the mighty real estate developer Country Garden.
The declining price momentum has also left its mark on investor sentiment, which is now no longer quite as euphoric. However, as economic data in the US was once again better than anticipated, bond yields rose again and are at a 15-year high.
US consumption will probably not last
The markets are now increasingly hoping for a soft landing. In particular, US consumers are supporting the global economy with their consumer sentiment. Overseas, however, purse strings are no longer as loose as the August figures on consumer confidence in the US show. This declined surprisingly sharply due to persistent inflation concerns. We also doubt the permanence of consumption for the following, non-exhaustive reasons:
- Despite the strong labour market, the available budget is dwindling, for example due to higher borrowing costs.
- Early-cycle companies are increasingly warning about negative sales figures.
- Company bankruptcies in the US as well as defaults on loans are on the rise.
The headwind may have taken longer than expected, but it is gaining strength. We therefore remain underweight in equities and prefer US Treasuries where the interest rate cycle is advanced. The final interest rate hikes by the ECB and the SNB are now likely to follow in September, which could also mean the end of the strength of the Swiss franc and the start of a more robust US dollar. We have once again expanded our currency speculation.