Back pedalling central bankers The turnaround rally in stock and bond markets – started by the previous week’s dovish central bank comments – petered out towards the end of last week, with central bankers seemingly at pains to reverse their messaging, or at least...

The Cambridge Weekly –6th November 2023 Dovishness proves contagious Just how much change a week can bring to markets was amply visible during the last seven days. Last week we wrote about how negative sentiment in stock markets can turn into a self-perpetuating...

The resilience narrative comes under pressure A potentially meaningful change in correlations happened last week. In recent times, a fall in yields (and therefore a rise in bond prices) would go alongside rises in equity prices, particularly the mega-cap growth...

Bonds yield volatility has markets guessing While the human suffering in the Middle East conflict worsened as expected last week, it has not yet spread further across the region. Therefore, and as we wrote last week, markets have not particularly acknowledged the rise...

Capital markets and war Last week saw the world most certainly taken a turn for the worse from a humanitarian point of view. Pictures of the atrocities committed in the Middle East, and indeed the timing, drew immediate parallels with the Yom Kippur War of October...

Recession fears creeping back Financial markets are in one of those occasional periods where the world’s economic realities do not quite seem to match what some asset price moves seem to want to tell us. Last week and continuing the trend from the previous week, we...

Economic resilience is about to be tested Historically September has on average not been great for investors, and as it turns out this year is no exception to that norm. Both equities and bond valuations have declined and even though equities have not materially moved...

To yield or not to yield Last week, stocks and bonds were still bruised from the ‘hawkish pause’. The US Federal Reserve (Fed) announced last Wednesday that it would hold interest rates steady at 5.25-5.5% but threw in some stern forward guidance to dispel any doubts...

Central bank hawks determined to defang inflation The European Central Bank (ECB) raised rates last Thursday, with the majority of its Governing Council members concerned that the inflation parasite may be alive for a while longer. Of course, parasites can continue to...

Energy in focus - oil prices up and an ill wind for renewables Markets have been generally quiet at the start of September, but energy is again becoming an issue for equity and credit markets. Oil prices have risen since the start of the summer, with Brent crude...

New school term has the US back at the top of the class Summer is officially over, but we are none the wiser regarding the direction of the economy. Or are we? Well, we quite likely are, but just a bit and not enough to know if next month’s equity markets will be...

Transcontinental growth divergence We don’t seem to be able to get away from writing about how bond yields have been driving equity markets due to their influence on underlying valuation dynamics. We wrote about it the previous week, on many occasions over the past...

Bonds are back Both equity and bond markets have had another rather difficult week and with it August has mostly erased the positive returns of July. From the medium-term perspective, UK-listed equities are nearly back down to the level at which we started the year....

Summer markets On the face of it, last week contained many of the news headlines that market optimists had been waiting for: rapidly falling US inflation and a cooling jobs market. In the UK, news that four of its major high street lenders were lowering mortgage rates...

Expect the unexpected July turned out to be another good month for portfolio investors as markets rose across the board, leaving only commodities and property investors in the red for the year. For more details on the month’s returns picture, please refer to our July...

Rate rises bouncing off ‘Teflon’ markets Equity markets continue to be buoyant after the rate rises in Europe and the US. Some market participants have been calling this the ‘Teflon market’ because nothing sticks to it. We would rather think of it as a sort of running...