Easing inflation indicates a soft landing scenario, but caution is advised – Month in Review: January 2023
Macroeconomic Environment Review
In January, the US Dollar Index fell by 1.3%, which was half the amount it had fallen in December. However, Dollar weakness was not evenly spread, as some currencies, such as the SEK and NOK, fell due to a property slump and weaker oil prices respectively, while others, such as the AUD and NZD, outperformed due to better news from China. Economic data reports and business and consumer surveys continue to come in better, leading to upgrades in growth outlooks for 2023. Inflation has peaked and is declining, leading to an easing of goods-price inflation and a potential pause in interest rate hikes after the Fed’s March meeting.
However, the current soft landing environment, which supports a risk-on appetite, may not last long and could be followed by a hard landing scenario later in the year as businesses struggle to adjust to harsher operating conditions. Improving growth prospects, easing inflation, and approaching the end of the monetary tightening cycle are good news for risk-taking but unfavorable for the US Dollar. Having said that, the strong rally in risk assets so far this year may lead to more defensive market reactions to disappointing news. This casts doubts on whether the current soft landing scenario may be sustainable in the long term, and any signs of this could make financial markets vulnerable.
Monthly Performance Review
During the month of January 2023, AENAON Syncro Strategies generated the following total returns net of fees:
Chart 1: Monthly Performance vs. Benchmark Indices – January 2023
Charts 2, 3 and 4: Inception to Date Performance vs. Benchmark Indices
You can always review our updated factsheets at the following Fundpeak links, with monthly performance updates and statistics since inception: