Economic Update

Disinflation sentiment cheers investors Last week was another positive one for global stock markets, with the narrative of a soft economic landing in 2023 appearing to gather support. Stock market gains in June have been spreading to the mid and small cap market segments, rather than just for a handful of mega-caps. In the US,…

Earnings improvements boost big tech stocks Last week, equity markets have generally headed higher. The most notable moves were in US stocks, with the large-cap tech names doing very well in aggregate. The Q1 earnings reports have almost all been published and, on a market-cap-weighted basis, developed world stocks have seen a return to earnings…

Trust the MPC to rain on May’s parade After a period of waiting, things are hotting up after central banks acted as expected. Although equity and bond markets have been bearing up well, in our estimation, underlying risks have increased since May began. Last week, it was the turn of the Bank of England (BoE)…

Rate sensitivity and banking failures set the tone With the coronation bank holiday behind us, the UK’s attention turns this week to the Bank of England (BoE), with its Monetary Policy Committee (MPC) expected to raise rates by 0.25% to bring the UK’s base rate to 4.5%. Last week, both Jerome Powell at the US…

Prospects of a warmer Spring Another relatively quiet week means a generally benign environment for risk assets, and recent data suggests the Spring months could be getting economically warmer. Global risk assets have been grinding higher as perceptions of external risk ebb away. Focusing on the UK economy, Friday’s retail sales data for March marked…

The return of calm bodes well for Spring Considering how unnerving the first three months of the year were, UK investors in globally-diversified multi-asset portfolios (akin to the ones we manage) have not fared too badly. Mildly positive returns across the risk spectrum tell the story of another storm having passed without sinking global capital…

A spring of hope after the gloom of winter? As the second quarter gets underway, the chances of a global recession seem lower now than they were towards the end of last year. Indeed, a combination of events during the first three months of the year have arguably reduced the likelihood of negative real growth…

Markets look beyond banking sector stress March ran the whole gamut of emotions for investors, but for the average UK investor holding globally diversified risk profiled portfolios, Q1 still ended above where it began, even if the journey was rather bumpy. Bank run fears that caused so much March angst and downward volatility quickly abated,…

Swiss parochialism backfires March continues to provide investors with the opposite of the ‘steady-as-she-goes’ environment of January and February. It appeared that global banking sector turmoil had eased after Swiss authorities officiated over a classic ‘shotgun’ marriage between Credit Suisse and UBS. Indeed, for a few days, stock markets and bond yields recovered somewhat, but…

Bank stress-testing in real-time Following the run on Silicon Valley Bank (SVB), fear has spread. The nervousness of market participants over recently elevated stock and bond valuations found its focal point and so the stock index of the aggregate global bank sector had a very bad week. SVB has become the first sizeable victim of…