Monthly Update 31/10/2022
Monthly Update31 October 2022 The Fund posted a return of -1.78% for October, underperforming the sector average return of 0.09%. Most equity markets ended in positive territory for the month, with the exception of the Hang Seng. Here investors remained nervous as the Chinese authorities continued with their zero tolerance policy on COVID. Other markets […]
Ear to the Ground
A number of central banks have held their latest meeting to set interest rates. The ECB acted in line with expectations, increasing its policy rate by 0.75% to 1.5%. The ECB also offered hints as to the future direction of its rate setting. Whilst further hikes are expected to combat inflation, which is still deemed as being too high, the central bank suggested that pace of rate hikes may be slower moving forward.
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It is fair to conclude that this week has again been dominated by politics, with the resignation of Liz Truss stealing the headlines. This has been very well publicised in great depth and therefore we will leave it there. From an economic perspective in the UK, this week we saw the release of CPI to September. This came in at 10.1%. This was slightly ahead of the consensus forecast of 10% and given this did little to unnerve markets.
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Eyes have been firmly focussed on the US this week as investors awaited the latest inflation print. Although a lagging indicator, the level on inflation in the economy is main factor driving the US Federal Reserve monetary policy. The headline inflation for September came out at 8.2%. Feelings were mixed on its release. ..
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This week has very much been a to and fro between whether the US Federal Reserve are about to pivot and adopt a more dovish monetary policy stance, or perhaps less tightening stance would be a more appropriate way to put it. Investors are therefore focussing on every scrap of economic data which they can get their hands on. We appear to be back…
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Do we ironically owe them an inadvertent thank you? This may appear to be a very strange suggestion in that, given the turmoil that their latest fiscal plans have brought, that we could even start to think that we owe this to Truss and Kwarteng. I am in no way taking any political sides here but bear with me on this one. In our special edition…
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Late last week we saw the first what was meant to be mini-Budget from Kwasi Kwarteng, the new UK Chancellor. Given the level and degree of announcements made however you could be mistaken for thinking that it was indeed a full budget. The tax cuts and levels of spending which the government have committed to are now very well publicised.
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Central banks took centre stage this week, with interest being set both in the US and here in the UK. The Federal Reserve were the first to the table, where they increased rates by 0.75%. This was in line with expectations, but some market commentators had touted a full 1% rise, a move adopted by Sweden earlier in the week. This takes US rates to the 3%-3.25% range.
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It is difficult to not sound like a broken record at the moment but we are currently within an environment which is very data sensitive, driving which way markets move next, at least in the short term. The case in point was made this week in the US. Inflation had been expected to come in at 8.1% year on year to August, but instead posted a reading of 8.3%…
Ear to the Ground
The latest inflation forecast for the UK from Citi took the market by surprise this week. Updated for a further rally in gas and electricity prices, they believe that a further upside shift in inflation is highly probable and that CPI could peak at over 18% in January. This is some way above the 13.3% predicted by the Bank of England in their latest report.
