Please find below our Investment Market Update as at 20th October 2023.
A much shorter commentary this week given last week’s more in-depth quarterly review.
This week’s agenda:
- The Middle East
- The big Apple
- UK and Eurozone inflation
The Middle East
The news has understandably been dominated by the very sad news from the Middle East. Economically, there is a risk that any further escalation will stoke inflation as the price of oil jumped on the news. Predictably the ‘safe haven’ asset of gold also spiked upwards benefitting our Invesco physical gold investment.
The US dollar as the world’s reserve currency of choice has also ticked upwards. At this moment, given events can change very quickly, equity and bond markets have fallen back a little, but we have not seen major movements. Bill Clinton’s campaign manager famously said that if he were reincarnated he would want to come back as the bond market, as that ‘intimidates everybody’. What he meant by this was that, with the bond market being many times larger than the equity market, when bond market yields rise then equity prices fall. This is due to the simple equation that when bond yields are high then the unknown return from shares looks less attractive. Falling bond yields in time will likely reverse this very quickly in favour of equities. Standard & Poor’s, which assesses the creditworthiness of governments, commented that the conflict threatened to compound a fragile global outlook as inflationary pressures remain unresolved.
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Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.