In recent weeks, the market recovery has gained good momentum. The broad S&P 500 index ended last week in positive territory again. Global equities recorded their first consecutive monthly gains in more than a year. On Wednesday, Fed Chairman Powell signaled a slower pace of rate hikes. That statement further reassured investors, although Friday's strong labor market data appeared to be a headwind.







 

In November, the Dow Jones Industrial Average closed the month up more than 20% from the September lows. The significant rise in the oldest index is interpreted by many as a first and important indication of an exit from the bear market. At the same time, the Volatility S&P 500, or also called the "fear index," is testing key August levels. If it overcomes them and drops to values of 18.00, it is very likely that the S&P500 will rise to the psychological zone around 4200 points.

All of this is a reminder of the importance of disciplined investing, rejecting impulsive actions out of fear or unwarranted optimism.


 

Bonds

Alongside the rise in markets and the softening in the Fed's tone, investment grade bonds posted their biggest monthly gain since 2008. A key catalyst for last week's rally in bonds and stocks were comments from Federal Reserve Chairman Powell. However, it should not be forgotten that a smaller step in rate hikes is not a firm call to end them. Bonds will still be fighting headwinds.

What will move the markets?

This week will be quiet in terms of economic data and central banker statements. As the Fed enters its traditional hiatus period ahead of its last meeting of 2022. Friday's producer price data will be interesting.

Disclaimer:
This information is marketing material and does not present investment consultation, advice, investment research, or investment recommendation. The information is valid as of the issue date of the marketing material and may alter in the future. The value of the units in the collective investment schemes changes over time and it could be higher or lower from the value at the time of the investment. No profits are guaranteed and risk exists for the investors to not receive the full amount of their investments. Investments are not guaranteed by a guarantee fund which is created by the country or another form of guarantee. Information on the performance of the financial instruments in the past is not a reliable indicator for future performance. Therefore, it is recommended for investors to acquaint themselves with the Prospectus and the Document with key information for investors before making a final investment decision. You can find these documents in Bulgarian on the website of Compass Invest - www.compass-invest.eu, and you can request and get a free paper copy at the office of the management company at: Sofia, 19 George Washington Str, floor 2, during every business day from 9 am to 5 pm. Future results are subject to taxation, which depends on the personal situation of each investor and may change in the future. A summary of the rights of the investors is available at the following hyperlink in Bulgarian: here. The mutual funds, which are managed by Compass Invest, are actively managed without following an index. We would like to inform you that Management Company Compass Invest can make a decision to terminate the offering of funds on the territory of the Republic of Bulgaria. The investment in units of mutual funds, in addition to benefits, carries certain risks like: liquid, operational, interest, currency, and political risk, as well as macroeconomical risk, currency risk, concentration risk, etc. The full information about risks can be found in the Prospectus of the respective fund.
Risks:
Despite benefits, the investment in shares of mutual funds brings certain risks like:
1) Market risk with the following components: a) interest risk related to a decrease of the value of the investment due to a change of the interest rates levels b) currency risk related to a decrease of the value of the investment, denominated in a currency which is different from BGN and EUR c) price risk related to a decrease of the value of the investment in the case of unfavorable changes of the market’s prices;
2) Credit risk – related to a decrease of the value of the position in the case of unexpected events with a credit nature which are related to the issuers of financial instruments, the counter side of exchange and OTC transactions, as well as countries, in which they operate;
3) Operational risk – from errors or flaws in the system of the organization
4) Liquidity risk – in case of forced sales of assets under unfavorable market conditions;
5) Concentration risk – in case of incorrect diversification of exposures to groups of related clients, from the same economic branch, geographic area, etc.
6) Position risk which is related to the change of price of a certain instrument in result of factors related to the issuer or in case of a derivative instrument – related to the issuer of the base instrument;

Additional information for the risks can be found in the Prospectus of the respective fund, which is available here: www.compass-invest.eu