Markets continued to deliver volatility across all asset classes (‘nowhere to hide’ is a popular refrain).

US stock indices managed to complete a seven week run of negative returns and have only just stabilised a little with a positive week as China shows signs of reopening their covid locked down cities. High-quality tech related names continue to be tarnished by the broader tech sell off and we’ve seen some bottom fishing of profitable companies.

Central banks continue to be perceived to be behind the curve regarding inflation. The Bank of England delivered a 25bp hike and the Federal Reserve 50bp with what appears to be a commitment to making several more hikes of the same magnitude for the foreseeable future. Inflation numbers in every advanced economy make ugly reading including across the Eurozone and Christine Lagarde’s language is becoming more forceful regarding the end of the ECB’s easy money policy and the path back to positive rates. China has its own set of problems regarding its stuttering property sector and covid policy and has just cut rates.

The 10-year Gilt reached 2% and keeps bouncing around this level, rates in the US and the UK have come a long way so we may be due a pause, certainly the effect of higher benchmark yields and wider credit spreads means that there is now good quality investment grade credit paying yields of over 5% attracting investors to add to exposure. High Yield remains almost closed from a new issuance perspective and some issuers needing to roll over maturing debt are having to pay coupons in double digits.

Commodities remain volatile and Crude now trades above $120 as the EU moves to ban imports of Russian oil. Metal prices are beginning to rise strongly again. Major currencies are slightly less volatile although worries about Sterling persist.

The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.

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