Compass Invest JSC is a leading asset management company, established in 2006 in Sofia. It is licensed by the Bulgarian Financial Supervision Commission (FSC). Compass Invest JSC is owned by Compass Capital JSC. As part of the group, Compass Invest JSC provides asset management services and management of mutual funds.
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A change in rhetoric from leading central banks on the movement of key interest rates was reflected in negative movements in financial markets in February. The aggregate bond index reported a decline of -3.3% for the month, while developed country equity markets fell -2.4%.
World indices retreat after surprisingly strong US labour market data
The past week was filled with emotions past Wednesday's Fed statement and then past Friday's labor market data.
The Federal Open Market Committee raised interest rates (expectedly for investors) by 25 basis points (0.25%), bringing the target funds rate to 4.5%-4.75%. This is a noticeable slowdown from recent increases of 50 and 75 basis points. More important to market participants was the softening in Powell's tone, and it was this that led to a rise in the stock prices and indices in general.
Last week was marked by inflation data in the US. They coincided with consensus expectations. This immediately eased the pressure and gave way to optimism that 2023 could loosen its grip. The S&P 500 rose, 10-year bond yields fell and the US dollar retreated against a basket of currencies. This is the complete opposite of 2022. Nonetheless, price pressures remain high, but if a similar market condition persists we could see a noticeable easing in the pace of Fed tightening.
Last week's data supports the idea of a pause by the Fed. Expectations are for one 0.25 basis point increase in February and another in March. This would reach the 5% target, where a pause in tightening is very likely.