Major US indices ended the week on a positive note as growth stocks and value stocks posted solid gains. The latest data for the second quarter was not as weak as some analysts had expected. The earnings results were highlighted by good reports from Amazon and Apple. Signs of inflation cooling and easing fears of over-tightening supported the market and buyers took over. The meeting of the Federal Open Market Committee (FOMC) ended on Wednesday last week. The outcome of the meeting largely corresponded to the expectations. The prime rate was raised by 75 basis points (0.75%) to 2.5%. This level is considered neutral by the Fed - monetary policy is neither restrictive nor accommodative. The highlight of the meeting, which became the catalyst for the rise in the main indices late last week, was a hint by Jerome Powell about a future slowdown in the pace of increases in the main interest rate. He noted that the 75 basis point increase was "unusually large."

Another leading topic this past week was the second quarter GDP data. Real GDP in the second quarter fell by -0.9% year-on-year compared to the last quarter. That's because real consumer spending rose with 1%, led by higher spending on services. Although the economy has contracted for two consecutive quarters, it is not yet widely accepted that the US economy is in recession. Consumers, the biggest part of the economy, were relatively stable in the first half of this year.

Bonds

The Bloomberg Composite Bond Index ended higher this week as the yield on 10-year US Treasuries fell below 2.65%. Bond investors appreciate slower economic growth and believe inflationary pressures will ease.

Raw materials

Oil prices rebounded, while natural gas posted gains for 4 straight weeks. Energy supply challenges in Europe will continue to be a factor in energy prices as future Russian supplies appear to be in question. The major metals, gold, silver and copper, had a solid week. Both gold and silver benefited from comments by Federal Reserve Chairman Jerome Powell on Wednesday that the next interest rate hike, expected in September, would depend on the progress of upcoming US economic data.


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This information is a 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 all the 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