Good morning,


Wyoming may be the least populous state in the US, but every August for just a couple of days, it becomes the centre and sole focus for investment markets. This year was no different as Fed Chair Jay Powell sent stocks sharply lower, as a result of his speech at the Jackson Hole Symposium. Further details are below, but the Powell speech essentially stated that there was still much work to be done to tame inflation, and very much set the expectation of a 0.75% rate increase in September, with more to follow before year end.


Friday was the 7th time this year that US stocks had finished down more than 3%, far more than the historical average. This can be interpreted in several ways, but the binary reaction of markets to commentary from the Fed strengthens the argument that uncertainty over the direction and pace of the key economic metrics of inflation, interest rates, and economic growth remains. The Fed’s preferred inflation indicator, PCE, cooled more than expected in July. But the core figure remains at 4.6% – easily more than double the Fed’s 2% target. Make of that what you will.


Whilst slightly under the radar, volatility remains in eurozone bond markets as the ECB withdraws stimulus. For example, the 10-year German Bund yield moved more than 10bps (0.1%) on just one day in 2021. So far in 2022, this has happened 79 times. The flexibility of active management has always been key in bond markets – now so more than ever.


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If you have any questions, please do get in touch.