March was characterized by enormous geopolitical tensions due to the conflict between the USA/Israel and Iran. The escalation in the conflict resulted in widespread drone and missile attacks on other countries in the Middle East and led to the almost complete closure of the Strait of Hormuz by Iran. Energy prices rose sharply and fuel became scarce in some Asian countries over the course of the month.
There was a pronounced risk aversion on the stock markets. Sectors with high energy requirements and the aviation sector were hit particularly hard. In contrast, energy producers were able to make gains. The rise in energy prices increased concerns about inflation and drove interest rates up significantly around the world. The markets are now pricing in a scenario in which central banks may be forced to raise key interest rates again despite the threat of an economic slowdown.
On the bond markets for government bonds in the USA and the eurozone, yields developed uniformly in a monthly comparison. Yields on 10-year US government bonds rose by 38 basis points at the end of the month, closing at 4.32%. Yields on 10-year German government bonds rose by 36 basis points from 2.64% to 3.0%. The yield on 10-year Italian government bonds rose much more sharply at 64 basis points.
There was also a consistent picture for corporate bonds. Yields on euro-denominated investment grade bonds rose from 3.10% to 3.76% and yields on US dollar-denominated investment grade corporate bonds closed 41 basis points higher at 5.14%. In the high-yield segment, yields on US dollar-denominated corporate bonds rose by 69 basis points to 7.4% and on euro-denominated bonds by 97 basis points to 6.4%.
The gold price corrected in March in an environment of rising interest rates and profit-taking. It closed the month 11.5% lower at USD 4,669 per ounce. Against the backdrop of geopolitical uncertainty, the US dollar rose by 2.2% to 1.155 against the euro.
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