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Updated: Mar 28, 2023

Another positive month for equities and a return to gains for bonds. This marks two months of positive equity gains, with gains in the US coming in a sharp recovery on the back of a less hawkish speech from Chairman Powell at the end of the month. Inflation appears to have peaked in the US but the fight is not yet over and the market may be moving too quickly.

Market Performance (GBP)

MSCI World Index - +4.07%

S&P 500 - +5.37%

FTSE 100 - +7.12%


US Inflation Falling But UK Remains High

US inflation (7.7%), UK inflation (11.1%), and EU inflation (11.5%) remained high for October (released November) but these are backward looking measures. Commodity prices,

including gas and oil, have come down further and global shipping costs are also reducing. This could suggest lower supply side inflation, which would help the overall inflation picture.

US Mid-Terms

In the US, mid-terms proved to be less of a 'Red Wave' than anticipated, particularly for Donald Trump supporters who struggled comparatively at the polls. The democrats

retained control of the Senate (51:49) and the House switched to Republican hands (213:220). For the Democrats, this was better than expected.

Central Banks Hike Again But Look For Slower Hikes In The Future

The Fed (+0.75%) and the BoE (+0.75%) both hiked again in November. The Fed is now looking at raising rates by 50bps in December, with a target Fed Terminal Funds rate of c.5% eventually. The BoE may have to hike further with higher inflation and Brexit issues.

China Protest

Chinese citizens began protesting against extreme Covid- Zero lock downs, a significant step in an authoritarian country. Covid-Zero policies are beginning to be loosened but this has led to spikes in deaths in a country without much immunity to the virus.

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