As we mentioned in the previous weekly market overview the intention of raising the interest rates, here it is. The Federal Reserve raised its interest rate target by 75 basis points (0.75%) to a 3.25% upper bound and presented a more pessimistic outlook in its Summary of Economic Outlook report. The committee raised interest rates for the third time in a row, and Federal Reserve (Fed) Chairman Powell signaled that "current increases ... will be appropriate." The Federal Reserve is willing to sacrifice growth for lower inflation. Growth expectations were revised significantly lower for this and next years. The Fed's new forecast for GDP growth in 2023 is 1.2% with an unemployment rate of 4.4%.

After the Fed's announcement, global markets fell sharply, with the S&P 500 ending the week down more than 3%. Worries about a "hard" landing of the economy are increasing. In addition, many market participants believe that estimates for the third quarter, which have been cut by more than 6% since late June, will need to be further cut amid a worsening macroeconomic landscape.

Bonds

The Bloomberg Aggregate Bond Index ended the week on negative territory. Inflation and rising interest rates remain the main theme for the bond market.

Raw materials

Even amid continued concerns about energy supplies in Europe from the Eastern European conflict, natural gas and oil fell for a second week in a row. Lower prices reflect continued concerns about demand as well as the state of the global economy. Metals also ended on red territory last week.

What's coming up this week

The highlights of this week will be the statements of several Fed officials, these may lead to additional volatility in the markets. On the economic calendar, the focus will be on Friday on personal income and spending data, which includes the Fed's preferred measure of inflation.

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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