Monthly report for September

The YTD return in P+ Balance was 6.5 percent at 30 September, representing a 2.0 percentage points increase compared to the end of August. 

The month's portfolio returns accounted for 3.1 percent for equities, 1.1 percent for special investments, 0.6 percent for credit bonds, 0.5 percent for real assets and 0.2 percent for equities. 

September was characterised by positive trends in the financial markets.

In the Eurozone, the employment rate reflected a continued strong labour market that - combined with prospects of fiscal easing in Germany -  painted a picture of a fairly strong economy. A vote of no confidence in the French Parliament at the beginning of the month did not trigger further market volatility as President Macron quickly appointed a new prime minister to seek support for a sustainable state budget. French domestic policy does, however, still appear to be struggling. 

At its September meeting, the ECB kept the key interest rate at 2 percent, and the growth forecast for 2025 was raised which supported the market outlook for growth. President of the ECB, Lagarde, also communicated that the downward pressure on inflation had reached an end, and the monetary policy was in a good place. Further interest rate cuts should not be expected in near future which caused the long-term interest rates to increase marginally. 

In  September, Trump, once again, threatened with tariffs, and he announced among other things a 100 percent tariff on patented pharmaceutical products from manufacturers that do not have production facilities in the US. This happened at the same time as a federal court struck down a number of Trump's tariffs. However, the tariffs remain in force until the cases have been heard by the US Supreme Court. 

In terms of monetary policy, Trump is attempting to undermine the independence of the central bank by having the central bank member Lisa Cook fired. He had, however, not succeeded with his attempt when the central bank held its interest rate meeting in September. At the meeting, the interest rate was cut by 0.25 percent as the US economic outlook shifted from focusing on the persistent inflation to a weakening labour market. The shift in central bank attitude supported the positive development in the equity markets. 

At the end of September, a government shutdown, which Trump may possibly use as an opportunity to dismiss thousands of civil servants, moved higher up on the agenda. This did, however, not slow down the markets, but it may trigger some market volatility in October.