The European sovereign debt crisis became a renewed focus of concern for investors from August 2011 onwards. Overall, the 2011 financial year was again characterised by an expansionary monetary policy in our main currency areas. In the Eurozone the first steps towards a more restrictive monetary policy were undone in the second half of the year, causing the key interest rate for the euro area to slip back to the level at the end of 2010. The yield on 10-year German government bonds fell to 1.7% for a time. This level was assisted not only by a monetary policy that remained committed to a strong supply of liquidity but also by a preference among investors for government bonds of the highest quality. Government bonds issued by a number of other European countries came under increasing pressure on account of inadequate actions to bring about fiscal consolidation; this was reflected accordingly in the spreads on bond markets. The European Central Bank sought to stabilise the capital market by buying up government bonds. US treasury bonds also fell to record lows with yields of less than 2%. Despite the move by Standard & Poor´s to downgrade the credit rating of the United States to “AA+”, the US profited from the dollar’s status as the global reserve currency and the perception of US treasuries as a safe haven investment.

The picture on equity markets was a mixed one. Considerable volatility and uncertainty were the hallmarks of the market environment. The losses seen in March in response to the nuclear disaster in Japan were initially made good again. In the second half of the year, however, the mood again became darker; along with the European sovereign debt crisis, equity markets were increasingly weighed down by fears of recession. While the DAX closed 2011 with a loss of 15%, the US Dow Jones Index surpassed the 2010 year-end mark by 5%.

After showing strength early on in the year, the euro ultimately remained broadly unchanged against the US dollar, pound sterling and the Canadian and Australian dollar over the course of the full 2011 financial year.