Monthly Comment - April 2023

A few weeks after the shock of SVB's bankruptcy and the onset of thebanking crisis, the responses from governments and central banks seem to havereassured investors. April looks nothing like the previous weeks filled withuncertainty and concern about both inflation and the upcoming interest ratedevelopments. Some improved job market statistics and a return to the morereasonable inflation levels observed in the second half of 2022 have togetherallowed for a return to calm. While the effects of the banking crisis appearcontained, the tightening of credit access induced by it has had enough of arestrictive impact for central banks to consider adjusting their monetary policies.The consensus now considers it more likely that the cycle is nearing its end in theUnited States, paving the way for a new period of stabilization of benchmark ratesbefore a potential decline. The rapid adjustments seen in bond yield curves inMarch and April have supported a rise in prices across most capital markets.Bond markets have not reacted significantly to the weakness of the US economyin Q1 and the decline in monthly inflation to just +0.1% in March. The two-year(4.07%) and ten-year (3.45%) US Treasury yields have remained relatively stable,taking a break after the drops recorded in mid-March of more than 100 basispoints while awaiting a more substantial improvement in inflation and confirmationof the end of the restrictive monetary policy cycle in the United States. The scoresremain neutral to positive, with the exception of more uncertain markets in theEurozone and the United Kingdom, which should suffer from upcoming upwardadjustments in yields necessary to curb inflation more drastically. Emergingmarkets and "high yields" appear to be the most attractive.In equities, we anticipated a change in momentum at the end of March, whichmaterialized with the return of some optimism, largely supported by factors relatedto interest rates. The downward adjustment of yields, the probable end ofmonetary tightening in the United States, and a macroeconomic scenario orientedtowards a moderate cyclical slowdown should support equity markets. The riskscores have been only slightly altered by the moderate overall increase this month.Europe maintains the highest risk score, along with the United Kingdom andJapan. The American and emerging markets have the best scores and appear tobe the most attractive.The commodities segment in our index declines once again in April (-1.13%).Indeed, the modest increase in crude oil during the month was evidently notenough to lift the entire sector. The initial upward movement following theannouncement of production cuts by OPEC+ was later partially erased by fears ofa global cyclical slowdown.