Macro Much like his billowing hairstyle, the cloud hanging over Q4 was equally impossible to ignore and endlessly discussed: Donald Trump’s imminent return as the now-47th President of the United States. Market reactions have been mixed. His presidency is widely forecast to be inflationary, reinforcing expectations that interest rates will stay elevated for longer. His […]
Category Archives: Investment
10
Oct
Oct
Macro backdrop Interest rates have dominated investor sentiment this quarter, driving pronounced volatility in bond, equity and currency markets. The long-anticipated chapter of monetary loosening began in earnest in the US and UK, with central banks reducing base rates by 0.5% and 0.25% respectively (source: Federal Reserve, Bank of England). This significant move has been […]
23
Jul
Jul
Macro Backdrop Inflation and interest rates remained at the forefront of investor concerns throughout Q2 2024. However, the news was more optimistic than previous quarters, with inflation rates lowering to be close to central banks’ targets. This shift paved the way for a fascinating move: the European Central Bank became the first major central bank […]
11
Apr
Apr
Macro Backdrop The first quarter of 2024 unfolded with a striking contrast of economic resilience and global tension. The United States, for example, continued to display surprising strength, with GDP growth estimated at around 3% and a still-robust labour market. Europe, as well as the United Kingdom, enjoyed a more positive – or less negative […]
11
Oct
Oct
Macro Backdrop As it stands today one of the most anticipated recessions ever has yet to materialise. In fact, economic growth, with the exceptions of Germany and Italy, has broadly been positive across the board, although outside the US recent gains have been much more modest in nature. As we are all painfully aware the […]
25
Jul
Jul
What’s the outlook for inflation and interest rates? As we come into the third quarter of 2023, we are seeing inflation slowing in some regions, such as the United States and in Europe, though it’s proving more stubborn in the UK, where core inflation is increasing. This is partly due to wages, which have been […]
10
Jul
Jul
Generally, whilst we are seeing price rises slowing in some areas, others are proving more stubborn and the path forward isn’t necessarily a clear one. One reason could be wages, which have been moving higher and are supported by tight labour markets. Year-on-year wage inflation in the UK including bonuses was 6.5% in the three months to April 2023, and excluding bonuses 7.3%.
The balancing act being performed by central banks between taming inflation and avoiding recession got even harder in March as a new fault line emerged in the banking sector. The crises at Silicon Valley Bank and Credit Suisse were idiosyncratic and largely self-inflicted – the former had been without a Chief Risk Officer for most of 2022 whilst pursuing a highly risky investment strategy and the latter had lurched from one well-publicised disaster or scandal to another in recent years.
Bonds have traditionally been a safe haven for investors thanks to lower risk and volatility than equities and alternatives. After the mini budget in September 2022, however, bonds were hit hard, leaving many questioning their role as a diversifier.
30
Mar
Mar
What is happening in bond markets? As you will no doubt be aware Credit Suisse has now been taken over by its biggest rival UBS, in a deal struck by the Swiss regulator last weekend. The bank has long been afflicted by a host of problems, caused by poor lending, scandals, and high levels of […]
