January monthly reports published
January kicked off with surprisingly strong labor market data from the US, which managed to change market sentiment to positive. As FED changed their wording in their January meeting to indicate a pause in rate hikes and becoming more data dependent going forward, the equity markets continued their recovery and ended the month approximately 8% up. The more risk friendly environment helped credit bonds to a very strong month as well. Since the main reason for “risk on” was a view that the central banks are going to be softer in 2019, even government bonds fared well in the month, which gave positive return for almost all major asset classes. To be noticed is that many soft data (affected by weak equity markets in the fall) are falling, while hard data remains relatively strong. Hence, we believe there is a chance for sentiment indices to bounce back, and rate hike expectations to return.
Excalibur returned +0,07% in January and Trude +1,21% where lower short rates had a negative contribution for Excalibur, while Trude took advantage of their increased allocation to credit risk.
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