A relatively short update today after the lengthy Budget overview and last week’s evaluation of the US election.
So far, market-wise, it’s been the US versus the rest of the world as US stocks have marched forward on the Trump card in anticipation of expected stimulus and looser regulation. However, what often looks like good news, can be bad news. US inflation has crept up and there are fears that interest rate reductions will slow or indeed stall completely with some commentators suggesting that interest rates could even go up. This would certainly dampen enthusiasm.
In the UK, the bank base rate has been recently reduced but mortgage swap rates are rising meaning fixed-rate mortgages have suddenly become more expensive, whereas variable rates have fallen. This is due to the combination of a Labour government, the Budget and fears over tariffs. The UK economy has stalled in the third quarter.
Yesterday, the UK Chancellor, in her Mansion House Speech, spoke about her enthusiasm for pension capital to be redirected to UK assets such as infrastructure and capital expenditure.
Bond yields have largely risen, placing pressure on bond valuations. A broad-based, international, actively managed bond fund is probably the way to play this sector of the market with opportunities in areas such as emerging market debt.
On this week’s agenda:
- UK mega funds to unlock £80 billion of investment?
- UK economy stalls in third quarter
- Fed cuts, but how far?
- US inflation hits 4-month high
- Market performance
UK mega funds to unlock £80 billion of investment?
Rachel Reeves, in her Mansion House Speech, outlined her ideas for steering pension funds, as major institutional investors, to invest in certain types of UK assets that the Government sees as key to boosting UK economic growth.
In trying to unlock up to £80 billion in investment in assets like infrastructure and UK growth companies, the Government will introduce legislation that will merge 86 local government pension schemes into a ‘Mega Fund’ that will manage assets worth about £500 billion by 2030 (ft.com).
Continues…
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