Carmignac Portfolio Patrimoine

Global markets posted strong gains in USD terms, with equities and bonds both advancing. However, the weaker dollar against the euro led to negative returns in euro terms.

US labour market data signaled a slowdown, prompting Fed Chair Jerome Powell at Jackson Hole to hint at possible rate cuts. Markets are now pricing in a 25-bps reduction in September.

Political tensions in the US intensified, as President Trump dismissed the head of the BLS and moved to oust Fed Governor Lisa Cook, raising concerns about central bank independence.

The US yield curve steepened, with long-end yields climbing on worries about Fed independence.

In Europe, political risk re-emerged, as the French Prime Minister faced a confidence vote. France remains a fiscal outlier within the Eurozone, amplifying investor unease.

Eurozone yields drifted higher, supported by improved growth sentiment, while July inflation data was broadly in line with expectations.

Global equities reached highs, buoyed by reduced tariff-related noise following the 1 August deadline, stronger US GDP growth, and growing expectations of Fed rate cuts in September.

The AI trade maintained strong momentum, with Nvidia hitting new all-time highs after robust results.

Trade tensions lingered, as the US raised tariffs, including a 50% levy on Indian oil imports from Russia. Commodity markets diverged: oil and gas prices declined, while gold rallied.

The fund ended the month in positive territory, outperforming its reference indicator, which declined over the period.

In a rare occurrence, stock selection slightly lagged the market, weighed down by the weakness of certain technology and consumer names.

The technology sector came under pressure after results from several large companies, which either fell short of expectations or were accompanied by cautious guidance, contributing to the broader market decline.

Nevertheless, our tactical adjustments helped offset this shortfall, particularly through our positions in gold mining companies, energy stocks, and emerging market banks.

Markets also suffered from the weakness of the US dollar, though the impact on the fund was more limited given our significant underweight to the currency.

Finally, on rates, we benefited from the steepening of the yield curve, our inflation-linked positions, and our short exposure to Japan.

The US shows early signs of stagflation, while Europe’s recovery is likely delayed until 2026.

We favor a short positioning on rates and long inflation strategies. Powell hinted at cuts, but markets overstate the Fed’s willingness to ease. Rising deficits and credibility risks support inflation-linked assets.

In Europe, we remain cautious on long sovereigns—particularly France—while maintaining exposure to inflation given elevated real rates.

We stay constructive on equities, with high exposure supported by the current environment. Our core allocation targets the US and Asian AI-driven capex cycle, complemented by diversified holdings across regions and sectors.

In currencies, we expect the US dollar to weaken further, pressured by fiscal laxity, Fed credibility concerns, and hedging flows.

To balance our risk exposure, we hold positions in the yen, credit default swaps, and gold.