Financial markets’ fixation with US unemployment data, despite its poor construction and large revisions, brought about a tough start to June.

With inflation headed lower although not yet at the pace central bankers would like, encouraging economic growth signs emerged from both the UK and Eurozone last week. 

GDP is short for Gross Domestic Product, a measure of an economy’s output and the most watched in many cases. It could also be an acronym for gigantic data processing and an important component of the artificial intelligence (AI)

Last October, post the Iranian-sponsored Hamas attack on Israel, we made an asset allocation call to raise cash across the funds we manage. The multi-asset funds were the main allocators to a cash increase as they would be expected to be more defensive when required.

Are We Nearly There Yet? - Not the first time we’ve used this title but appropriate during school holidays and reviewing market optimism, or lack thereof, about official rate cut expectations in the UK, EU and US.

Two things grabbed market attention in the first half of March: The UK budget on 6 March which had little impact on financial markets and the US employment report which commands more attention than it warrants given huge revisions to previous data.

The final day of February brought the latest update on US inflation or, to be more precise, the US Federal Reserve’s core personal consumer expenditures (PCE) prices index, which was released for the month of January.

One of the problems for central banks on the path to lower interest rates is the tightness of the labour market and the effect on wages. 

Inflation in the US improved, in the UK it faltered yet the trajectory remains downward; food inflation was the lowest since April 2022 on a year-on-year basis when data was released in January.

Financial markets began 2024 like markets that have enjoyed themselves too much in the run up to Christmas.  As we indicated previously, over-optimism was in play with regard to futures markets’ official rate reductions forecast for 2024 in the US, UK and Europe.

December was a month when inflation continued to fall in developed countries allowing financial markets to price in significant official rate cuts for 2024. Economic data was supportive and welcomed along with the improved inflation backdrop.

November has been about a decent bounce in developed markets’ equity prices in the first few days, on the belief that the central banks of the US, Europe and the UK were through with tightening monetary policy and Japan wasn’t for any meaningful change to its overly accommodative stance.