Commentary, 27.04.2023
The good news first: Due to diminished correlations between bonds and equities, multi-asset portfolios finally offer substantial diversification advantages compared to single-variety portfolios. In addition, it is again possible to generate positive nominal returns with investments in money due on demand and in money market instruments.
However, this development also has its price, as more than a decade of extraordinarily expansive monetary policy has to be “normalized”. The main focus at the moment is therefore on the negative effects of an exceptionally rapid and extensive interest rate turnaround in the USA. While a rise in key interest rates of 475 basis points in just a little over twelve months made negative consequences for the real economy appear very likely, the extent of the instability of some US regional banks as a result still surprised some observers. Because although the liquidation of the Silicon Valley Bank (and Credit Suisse, as it were, as "collateral damage") seemed to have been digested, the First Republic Bank is another US bank that is currently in the focus of attention, whose possible restructuring leaves many more questions unanswered than expected.