Good morning,


Markets cheered the economic data and Fed comments from last week (more details below) and equities recorded their best week in some time, as bond yields also fell. So, in short, fairly good news across the board. For those without the context of the last two years, a report that states that there were less jobs created than expected and unemployment was the highest in a year might expect a negative reaction. Not so on Friday, as the ‘bad news = good news’ replaced the ‘higher for longer’ narrative – at least for now.


It is of course always worth putting the returns over any one week into perspective, and whilst last week was strong, the returns for risk assets in recent months has been underwhelming. At a fundamental level, investment markets reflect human behaviour and emotions. With that in mind, it’s likely that the underlying reality may not be as positive as markets reflected last week, but equally not as negative as portrayed over the last several months. Higher interest rates attempt to tame inflation by slowing demand, and ultimately slowing economic growth. It is worth bearing this primary relationship in mind in the coming months, as the effect of higher rates permeates through the global economy.  The ability of global central bankers to successfully manage this relationship continues to be central to the prospects for risk assets.


As always, if you wish to discuss anything in further detail, please do get in touch.