One number, and everything is different. The monthly US nonfarm payrolls showed a rapid increase in jobs in July and pushed the unemployment rate down by half a percentage point to 5.4 %. Investors found this such good news that they suddenly forgot concerns about economic risks. At least that is what the immediate market reaction suggests.
In situations like these, it is worthwhile not to get caught by the hectic pace of the markets. For the risks have not simply disappeared. Nor have we thrown away our "green recovery" scenario because of this news. In our view, the recovery remains on track.
The equity markets may continue to rise in this environ-ment, even if the air has become thinner in terms of valuations. We interpret the resilience of recent weeks as a good sign and remain invested according to the strategic allocation. On a regional level, we continue to prefer Europe.
In our view, the decline in bond yields is only temporary. The positive economic outlook and the signals of the US Federal Reserve to reduce securities purchases speak for rising yields in the coming months. Therefore, we remain underweight in government bonds.
However, after the recent price decline, we are increasing the gold allocation. We appreciate not only the diversification properties of gold, but also see the gold price well supported by negative real interest rates and a weak dollar in the longer term.