Stock and Bond Market Correlations.

It might just be that we have entered a healthier period where equities are driven more by the prospect of increased productivity due to themes such as AI and the robustness of the economy than by excess liquidity finding itself into the market, even at elevated valuations. This should make the 60/40 portfolio stance a…

Summer rate cuts expected.

Rhetoric from the Federal Reserve and the Bank of England following monetary policy meetings this week has been softer in tone regarding the fight against inflation and the consequent outlook for interest rates. Markets are discounting…

Don't bank on big interest rate cuts.

Yesterday, 20th February, Andrew Bailey was in front of the Treasury select committee and the headline in the financial media was that the Bank of England does not have to wait for the inflation rate to hit the 2% target before cutting interest rates. In the same breath the Governor said…

Is the year-end rally overdone?

Markets rallied strongly into the year end driven by the prospect of interest rate cuts in the first half of 2024. In this article we question the justification for such cuts in rates and the short-term optimism that this has brought to equity markets. Our investment process remains focused on underlying fundamentals.

2023 Year in Review

2023 has been an eventful year of interest rate hikes, inflation holding on and market volatility. We recap on the changes we have made to client portfolios and what next year might look like.

The Market Cycle

With interest rates likely to remain at this higher level for longer, our place in the market cycle is changing. This article explains how we can take advantage of this new phase and seek investment opportunities.

Higher for longer.

Until recently markets were anticipating interest rate cuts by the middle of next year. While the peak in rates is likely to be soon, the stubbornness of inflation has now caused the market to put these rate cuts much further out, causing turbulent bond markets to grasp the headlines.

Fixed income emerges from the doldrums.

Following the 2008 financial crisis and the pandemic, interest rates had been stuck at close to zero in the major economies for years. This made bond markets - rates on longer term loans - very unattractive. Interest rate rises over the last 18 months may have changed this.

Post-Covid markets in the context of the last two decades.

As policy makers now deal with an inflationary environment after years of fighting deflation, higher interest rates will lead to a different market backdrop.