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Viewpoint – January 2024

Markets began to consolidate in January and returns ended the month in a more mixed fashion, compared to the ‘(almost) everything rally’ seen in Q4 2023. Global developed and US equities both continued their momentum to reach all-time highs, returning 1.2% and 1.7% respectively. Equity markets in Asia continued to show limited signs of agreement, with Japan posting a 7.8% return, while further challenges in China impacted Emerging Asia, falling 5.2%. UK equities ended the month down 1% after some varied data prints, while European equities outperformed, returning 1.9%.

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Viewpoint – November 2023

Following a bruising 3 months, equity and bond markets came back with a bang in November, in most cases recovering all the ground lost since July, in an almost unbroken run of gains through the month. The extraordinary shift in risk appetite saw global developed world equities return 9.4% in the month, with US markets producing among the best returns in local currency terms, +9.1%, while dollar weakness pushed non-US markets to even higher returns in USD terms. The Chinese market also rallied, but by a modest 2.5%, continuing its sharp underperformance this year.

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Viewpoint – August 2023

Equity markets struggled for direction in August, falling sharply initially before a partial recovery reduced the losses in the MSCI World index to -2.4%. Bond markets continued the pattern since the mini banking crisis in March with another negative month, the JPMorgan Global Government Bond index -1.3%.

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Viewpoint – July 2023

Risk assets performed well in July, continuing the pattern of recent months, while safe-haven government bonds generally produced negative returns as yields ticked higher.

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Viewpoint – May 2023

A month which began with the collapse of another large bank in the US, First Republic, and dramatic falls in the share prices of several other regional banks, ended with the euphoria of the rapidly unfolding AI boom reflected in extraordinary share price gains for the major beneficiaries, most notably Nvidia, whose share price gained 36% in May, taking its return YTD to 160% and a market cap of $1trn.

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Viewpoint – February 2023

After a benign three months, February proved to be altogether more challenging. Bond markets suffered a big sell-off as the market substantially repriced interest rate expectations in line with the Fed’s view. At the beginning of the month the Fed raised the Fed Funds rate by 25bps as expected, to 4.5-4.75%, and, while signalling further rises ahead, the accompanying statement was interpreted as somewhat dovish.

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Viewpoint – January 2023

Following a bruising year for investors in 2022, markets opened 2023 in much better spirits. Nearly all the major asset classes enjoyed strong returns, with global equities up over 7% in dollar terms in January, global bonds by close to 3%, corporate and emerging market bonds outperforming governments, and gold up almost 6%. Commodities were generally more subdued, with the oil price declining by 2%, taking it 7% lower than a year earlier, a dramatic turnaround from its steep rise in the early months of 2022.

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Viewpoint – October 2022

The third quarter started with bond yields falling, equities in the midst of a sizeable rally, and a perception that increasing evidence of a slowdown in the US and Europe would lead to a relatively short tightening cycle and a more dovish Fed. It ended with an increasing probability of recession, yet the most hawkish Fed since the Volcker era, bond markets in disarray and equities at new lows for this cycle.

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Viewpoint – September 2022

The third quarter started with bond yields falling, equities in the midst of a sizeable rally, and a perception that increasing evidence of a slowdown in the US and Europe would lead to a relatively short tightening cycle and a more dovish Fed. It ended with an increasing probability of recession, yet the most hawkish Fed since the Volcker era, bond markets in disarray and equities at new lows for this cycle.

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Viewpoint – August 2022

The rally in equity markets that started in mid June continued into the first half of August, taking Wall Street 17% off its June low, but was ultimately overwhelmed by the global energy crisis and extraordinary falls in bond markets through the month, reversing most of the gains of the previous two months. The biggest falls came in Europe, and most extreme was the UK, where yields on 2-year government bonds rose by 130bps, taking the yield to 3.0% at month end, the highest for 15 years. The UK 10-year yield also rose dramatically, up by 94bps to 2.8%. Eurozone bond markets fared only slightly better, with the German 2-year yield up by 93bps to 1.19% and the 10-year up 73bps to 1.54% over the month.

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