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Updated: Mar 28, 2023

A more positive month for equity markets, with some potential green shoots emerging in the bond market and a rally in the equity market. A new PM in the UK saw an end to the disastrous mini-budget proposed by Lizz Truss. The Federal Reserve have talked of a 'step-down' in rate increases but inflation remains stubbornly high. China confirmed Xi Jingping as leader.

Market Performance (GBP)

MSCI World Index - +2.92%

S&P 500 - +4.81%

FTSE 100 - +2.99%


Green Shoots But Inflation Remains High

US inflation (8.2%), UK inflation (10.1%), and EU inflation (10.7%) remained high for September (released October) but these are backward looking measures. Commodity prices, including gas and oil, are coming down and global shipping costs are also reducing. This could suggest lower supply side inflation, which would help the overall inflation picture.

The End Of Truss-Enomics

Lizz Truss resigned amid considerable backlash against her unfunded mini-budget, which caused UK borrowing costs to increase substantially. Jeremy Hunt, the new Chancellor,

steadied the ship, and Rishi Sunak, the new PM, has restored some confidence in markets.

Central Banks Step Down

The Fed may open the door to slower interest rate hikes at their November meeting. The market is now anticipating a terminal rate of <5%, a step down from the c.6% expected previously. If this is the case and inflation is brought under control, this could be positive for risk assets.

China Policy Confirmed

Xi Jinping was nominated for another term as CCP leader, cementing his status as the supreme power within China and elevating his legacy to that of Moa and Deng as leaders to serve three terms. COVID Zero will continue. Chinese equities continued to sell off.

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