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Last year, US Treasuries suffered one of their worst years this century. Treasury Inflation-Protected Securities (TIPS), on the other hand, returned +6%, making 2021 a pretty good year for these bonds versus their long-term average. So how did investors like us make money in TIPS; was it purely down to QE-fuelled irrational behaviour; and what do we expect from here?

Two years ago, news began to emerge of a cluster of pneumonia type sickness in China, soon to be identified as a novel coronavirus. In early January 2020 the WHO reported no evidence of significant human-to-human transmission. Within days it became clear that China saw things very differently, when it forced the 11 million people of Wuhan into a strict lockdown. The rest is history, but few of us then anticipated that as we entered 2022 the pandemic would still be raging, at record case numbers globally of over two million per day. Even fewer would have predicted that in those ensuing two years global equity markets, as measured by the MSCI World index, would return over 40%.

Last year, US Treasuries suffered one of their worst years this century. Treasury Inflation-Protected Securities (TIPS), on the other hand, returned +6%, making 2021 a pretty good year for these bonds versus their long-term average. So how did investors like us make money in TIPS; was it purely down to QE-fuelled irrational behaviour; and what do we expect from here?

Happy New Year to all our readers. As we enter the third year of the Covid-19 pandemic, uncertainty remains elevated in financial markets, largely centred on further Covid variants and the prospect of tighter monetary policy. Markets have largely brushed off these concerns of late and have come a long way since the lows of 2020.
As equity markets continue to rise and reach new highs, valuations across many developed equity markets are looking stretched and it is becoming increasingly difficult for investors to find value. While many markets appear expensive, we believe there are opportunities to which investors should pay attention: one of those being Japan.