Newsletter dated September 22, 2016

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Stocks and bonds rallied in Asia and Europe on Wednesday, advancing with commodities after central banks including the Federal Reserve indicated monetary policies will remain accommodative. US Fed left interest rates unchanged and scaled back its projections for hikes in 2017 and beyond.

Despite mounting opposition inside and outside the U.S. central bank Fed Chair Janet Yellen delayed an interest-rate increase again to give the economy more room to run. According to interest rate future markets the probability of an interest rate increase by the end of this year has increased to 61% recently versus as low as 8% in June of this year.  See also our chart of the day.

Erwin Lasshofer and his INNOVATIS team see liquidity by central banks as a key driver for global markets. Current moderate growth prospects give central banks worldwide room for monetary stimulus while inflation remains under control. We continue to expect market upside potential to be limited since US Fed would curb significant growth by rate hike. On the downside we do see some room for further stimulus. In this environment we see superior opportunities for active management based on structured notes.