Macroeconomic update for May 2022

Market impact
Investing strategies
Global Trends
CIO Update

Published on 29.04.2022 CEST

Our macro view as of May 2022

Western central banks’ tightened policies and China’s Covid clampdown are making the markets nervous. But that is not necessarily bad for equities.

How we position ourselves strategically:
The monthly CIO Update analyzes the current market environment and throws a light on the backstory. It is presented by Dan Scott, Head Multi Asset and Michaela Huber, Economist.


How shares have held up over the last 70 years during tightening cycles

High inflation and low unemployment in the USA and Europe are good reasons for hiking interest rates. But that is not the case in emerging markets. If China wants to reach its ambitious goal of 5.5 percent growth, the government will have to stimulate the economy—which is what it is doing.

A study by a team of Vontobel experts investigates how shares have held up over the last 70 years in times of tightening policy. Shares have been able to generate attractive returns in times of slow cycles (less than one interest rate step per Fed meeting) and fast cycles (at least one interest rate step per meeting).

How does that impact our preferences? For bonds there are no changes. Within equities, we upgrade Swiss stocks, because there are a large number of defensive titles (pharma, consumer goods). On the other hand, we have lowered our rating for Japanese stocks. For alternative investments, we maintain our overweight for gold and commodities.





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