During the first month of the year, we observed a solid recovery in the equity and fixed-income markets. The main stock indexes, the S&P 500, ACWI* and NASDAQ, accumulated returns of 6.18%, 7.10% and 10.68%, respectively, during the period; this last index, from the technology sector, was one of the biggest beneficiaries at the beginning of the year. In the fixed-income markets, U.S. investment-grade corporate bonds stood out, yielding 4.01% in the month in a more favorable interest rate environment.

Positive investor sentiment was driven by an improved outlook from central banks around the world in their battle to control inflation. And while they did not declare victory in the face of the problem and indicated that there is still some way to go, it is a fact that they seem to be more comfortable with the progress made so far. As a result, the Fed moderated the pace of rate hikes with a 25bp increase at its February 1 meeting and used words such as "welcome" and "gratifying" to describe the latest deflationary data, which the market welcomed as it interpreted that the bullish cycle is getting closer to its end.

On the other hand, the fourth quarter corporate reports of the S&P 500 companies announced to date slightly exceeded analysts' low expectations. On a year-over-year basis, sales increased 4.3%, driven by the energy and consumer discretionary sectors, while earnings declined 5.3%, with increased labor costs, deteriorating consumer confidence, and a stronger U.S. dollar affecting profitability.

Finally, 517,000 jobs were created in the U.S. economy during the month of January, significantly exceeding all economists' expectations and bringing the unemployment rate to 3.4%, the lowest since May 1969. This report confirms the resilience of the labor market and reduces the risk of recession in the short term, but also validates the Fed's position that a couple more hikes are necessary to achieve a monetary policy tight enough to control inflation.

The Grupo Inversión committee agreed on the following changes to the portfolios during the month: with respect to equities, it was decided to exit the health sector and increase exposure to the technology sector, seeking a more attractive relative valuation, while for fixed income, market opportunities were taken advantage of to increase fixed rate duration within the portfolios.