The World In A Week - The BoE threads the needle
Written by Cormac Nevin.
The Monetary Policy Committee of the Bank of England (BoE) met last week at Threadneedle Street and decided to raise the Bank Rate by 0.5%, from 4.5% to 5.0%. This was most likely in response to an unchanged UK inflation rate of 8.7% which was published the day before, as well as strong employment and wage data released the prior week which the BoE likely interpreted as the signs of an economy which is running hot. While we have seen sustained falls in inflation in Europe and the US (which we suspect could continue and indeed accelerate) we think inflation could remain relatively higher in the UK due to the unique challenges faced by the economy. These include a labour shortage as well as a multi-decade inability to build sufficient housing or energy infrastructure. These forces will likely see inflation in the UK remain higher than it ought to be, while few of these problems will be solved by higher interest rates. The BoE is threading a precarious needle between its use of interest rates to attempt to cool inflation (compounded by sustained political pressure for them to do something) and inflicting significant damage on the disposable incomes of the portion of the population with variable rate mortgages. While more people own their homes outright than in the 1980s, the size of the outstanding mortgages are far larger for today’s generation of young homeowners.
Elsewhere in the world, we saw evidence that economies are really starting to weaken in Continental Europe and the US. The Purchasing Managers’ Index (PMI) came in significantly lower than expected which suggests to us that higher interest rates in those economies is raising the probability of a recession. Geopolitical risks also remained elevated, as the weekend saw an attempted coup against Vladimir Putin’s Russian regime by a band of Russia’s mercenaries employed on the Ukrainian frontline.
While markets were broadly down over the course of last week, many components of markets appear to be disregarding the growing list of potential challenges. This leaves us comfortable with our preference for substantial diversification in the face of a wide range of potential outcomes.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 26th June 2023.
© 2023 YOU Asset Management. All rights reserved.
The World In A Week - Enjoy the silence
Written by Shane Balkham.
Another week was dominated by central bank meetings, interest rate decisions, and inflation forecasts. The underlying commentary remains unerringly similar, and it would have been a simple exercise to simply rehash a previous ‘The World In A Week’ from earlier this year.
The European Central Bank raised rates and signalled that further rate rises are likely. The Federal Reserve paused its rate hiking cycle, allowing it time to gather more data and reflect on its next actions. This was caveated with the likelihood that more rate rises could be needed in 2023. Mixed signals indeed.
The Bank of Japan meeting concluded with another month of inactivity, whereas the People’s Bank of China moved in the opposite direction and cut short-term borrowing rates, reacting to a broad slowdown in domestic retail growth.
Not every week delivers headlines that grab our attention, and it is important not to try and create or manufacture a story, as equally as it is not to become complacent. Maintaining an appropriately diversified outlook is critical to navigate turbulent and quickly changing markets and that is something we are highly committed to at YOU Asset Management.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 19th June 2023.
© 2023 YOU Asset Management. All rights reserved.
The World In A Week – The trillion dollar question?
Written by Millan Chauhan.
Previously, there were four other US stocks with a market cap greater than $1 trillion which included Alphabet (Google), Microsoft, Amazon.com, and Apple. NVIDIA has now joined this exclusive club following its immense rally year-to-date. NVIDIA was founded by Jensen Huang in 1993 and it has taken thirty years for it to eclipse the $1 trillion market cap. Its capabilities stemmed from being a dominant player in the video game chips segment which benefitted greatly from the pandemic as demand for gaming increased substantially. However, the Company pivoted into the AI chips market with NVIDIA producing one of the core crucial components which is the graphics processing unit (GPU). With AI’s potential being understood, adopted in practice, and realised, the demand for this type of technology has skyrocketed as companies are devoting significant resource towards increasing their longer-term efficiencies within their business. The stock has returned +175% year-to-date and its valuation has become significantly more expensive but those now willing to pay more than 50x next year’s predicted earnings presumably expect their competitive position to remain unchallenged for years to come.
Last Friday, we saw further signs of a strong labour market in the US with 339,000 jobs added in May which vastly exceeded expectations of 190,000. However, we did see the US unemployment rate increase to 3.7% from 3.5% which was also above forecasts of 3.5%. The next Federal Open Market Committee meeting is in mid-June where the Committee will have received May’s inflation reading by then to make their interest rate decision.
Elsewhere, in Europe we saw eurozone inflation slow to 6.1% in May from 7.0% in April which was below forecasts of 6.3%. Christine Lagarde, President of the European Central Bank (ECB) stated that inflation is still far too high and that it is set to remain elevated for much longer. The ECB is also set to meet next week and will make its interest rate decision.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 5th June 2023.
© 2023 YOU Asset Management. All rights reserved.
Inheritance tax cut on the cards
The Prime Minister Rishi Sunak is said to be considering cutting Inheritance Tax (IHT) ahead of the next general election in 2024.
According to a report first published by financial news site Bloomberg, Sunak is considering a cut to IHT alongside other potential tax cuts in order to garner more public support ahead of a new election campaign. There is however little detail on the proposed cut and what it might contain.
What might an IHT cut contain?
The number of households liable to IHT has slowly crept up over a decade, mainly thanks to the threshold staying at £325,000 since 2009. This means that property values which have risen naturally over time have tipped homeowners over the threshold, resulting in more estates being subject to larger IHT bills. The basic 40% IHT rate has also remained the same for some time. As such, these two aspects of the tax could be the chief target of a change, either with a cut to the rate or lifting of the threshold.
IHT is one of the most disliked taxes in the country, aside from the fact it is payable when someone dies, chiefly because it is seen as taxing assets and income that have already been heavily taxed along the way in life. Cuts to the tax would be a popular move. Research from legal firm Kingsley Napier found that three in five Brits (63%) support increasing the allowance, while nearly half (48%) would be in favour of abolishing the tax, which brought in £6.1 billion to HMRC last year, altogether.
Complexity
IHT was the subject of a review by the Office of Tax Simplification (OTS) in 2018. However, the main findings of this were that the process of IHT was too onerous for families and the administration should be simplified. The Government however rejected the changes in 2021.
Other potential changes could include the rules around gifting, the residence nil rate band – currently £175,000, and other aspects of the tax. It is however unlikely that we’ll see IHT cuts imminently. There are two key opportunities for the Government to make such a move, this Autumn in its financial statement update, or in the 2024 Spring Budget. This is open to political speculation and is dependent on how the economy fares this year. Government borrowing has already come in less than expected in the past 12 months, which suggests Chancellor Hunt could have more room for manoeuvre come his next financial update.
Ultimately, much will depend on the polls and whether the Prime Minister thinks he could win next May (a typical time of year to hold the general election) or wait until the last opportunity of December 2024.
Either way, the key message for anyone thinking about planning their wealth for the long term is to have a strong plan in place for any outcome. As the goalposts move, having access to key advice for structuring your wealth is critical for positive lifelong outcomes.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 16th May 2023.
Food prices rising at record levels – but does that mean higher inflation and interest rates for longer?
Households have felt persistent pressure on their everyday costs, but food price inflation has been particularly pernicious in recent months.
The Office for National Statistics (ONS) reported year-on-year food price increases of 19.1% in March 2023 based on the consumer price index (CPI) measure. This was an increase from 18% the month before. Consumer data provider BRC-NielsonIQ saw its shop price index show 17.8% price increases year-on-year in April – the highest increase seen in 45 years.
With the headline rate of 10.1% CPI inflation, should we be concerned about inflation persisting for longer, and thus bigger interest rate hikes?
Why food prices are soaring
Food prices are just one aspect of a wider basket of goods and services the ONS measures in order to gauge the general rise in the cost of living for households. Food price rises are particularly high because they suffer from the secondary effects of the kind of inflation the UK, and most of Europe, is suffering. The current high level of inflation is primarily stoked by an energy crisis, which in turn is caused by returning demand post-pandemic and then the invasion of Ukraine by Russia.
Energy prices are a painful place to see rapid rises because they essentially affect everything else. From factory lines to food processing and just about anything else you can think of, households and businesses all need energy to function. If the price of energy rises, it holds that the prices of things we make should rise to cover that cost. Food is especially volatile because it has even more external factors that can affect it, plus major food production supplies, such as from Ukraine, are under extreme and unusual pressure.
Food prices are so volatile most countries produce ‘core inflation’ statistics that exclude food prices. CPI core inflation is currently at 6.2%.
Interest rates
With food inflation so persistently high, this begs the question whether the Bank of England will meet the challenge with more aggressive rate hikes in order to bring prices down. However, precisely because the bank knows how volatile food prices can be, it will be cautious about acting upon those figures alone.
Energy prices are starting to come down in earnest, with wholesale gas prices now below the level they were at before the invasion of Ukraine in February 2022 and at the lowest level since December 2021. Plus, other global macroeconomic effects such as an unusually strong dollar are busy unwinding. A strong dollar tends to increase inflation pressure because many commodities are traded globally priced in dollars.
If the pound falls versus the dollar, then those commodities become more expensive for the country to acquire and vice versa. Since reaching a low of £1:$1.07 at the end of September last year, the pound has steadily gained ground and is now trading around $1.26.
All that said, the Bank of England will be cautious about ending rate hikes, or even starting cuts, until it is sure inflation is coming back to earth in a meaningful way.
Where does this leave me and my money?
Inflation is a critical metric to watch when it comes to long-term wealth management. The level of inflation has a direct impact on where central banks go with interest rates and this in turn has profound implications in everything from government debt and taxation levels to market performance and cash value erosion. Over time the figures might seem irrelevant but the only way to keep ahead of inflation and prepare for major financial and tax-based changes that will affect your portfolio and lifetime wealth is careful management.
If you would like to discuss inflation, interest rates and the general outlook for the rest of 2023 and the implications for your wealth, don’t hesitate to get in touch.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 16th May 2023.
When is your Tax Freedom Day?
Tax Freedom Day is the day in the year where, theoretically, you’re no longer working solely to pay your annual taxes and instead begin keeping your own money. These numbers are of course calculated by averages. Individually speaking, everyone will have a slightly different Tax Freedom Day of their own.
In 2022 Tax Freedom Day fell on 8 June, whereas in 2021 Tax Freedom Day fell a full week earlier, such is the heightened burden of taxation. It reminds us that any money you earn effectively goes straight into the Government’s coffers. Last year it took an average worker 159 days to start earning money for themselves. The Tax Freedom Day of 2022 was the latest on record, according to the Adam Smith Institute, thanks to a persistently increasing tax burden on households, and it is only predicted to fall even later in 2023. However, it is possible to bring your Tax Freedom Day forward.
Planning for tax efficiency
This especially matters if you’re facing taxes on more than just income. Taxation comes in many forms and can be a serious barrier to successful wealth growth.
Through an individual’s lifetime, taxation will take a cut of:
- Property through stamp duty and council tax
- Income through income tax (and National Insurance)
- Expenditure through VAT
- Profits on investments through capital gains tax
- Profit on investment income through dividend tax
- Passing on your estate to loved ones through inheritance tax (IHT)
There’s good news and bad news in this. Some of these taxes are essentially unavoidable. Income tax, council tax, VAT and stamp duty are effectively unavoidable unless you become a tax exile. Obviously with income tax there are ways to reduce the burden, but typically this comes from reliefs such as Marriage Allowance, which won’t apply to everyone and will only reduce the liability by a relatively small amount.
However, there are significant and effective ways to mitigate the effects of taxes on investments, long-term savings and other liquid investments. This comes primarily through the use of pensions and ISA allowances.
Pensions allow for the deferral of tax liability until you access your pension. Of course, there are implications when you do draw down, but the relief at source available makes this worth it to a large extent. Plus, the 25% tax free allowance and other ways to structure drawdown make pensions still very valuable. Add to that the recent abolition of the lifetime allowance and pensions are a viable method for mitigation still. Plus, pensions are currently largely exempt from inheritance tax, adding another feather to the cap of the vehicle’s tax efficiency. They can also be a good way of getting around the gifting allowance, as individuals are able to pay in to pensions for children or grandchildren from any age.
ISAs provide a reverse benefit to pensions for long-term tax liability mitigation. While you won’t get upfront relief for contributions, there are essentially no implications when it comes to using the money at the other end.
Finally, one of the most disliked and complicated taxes, inheritance tax (IHT), has a myriad of rules and allowances that allow for mitigation. However, what is essential to remember with IHT is these mitigations are best applied over time. This makes careful wealth management and planning critical. Coupled with well-structured growth through ISAs, pensions and other methods you could see your own personal Tax Freedom Day start to fall much earlier in the year.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 16th May 2023.
Should you trust finfluencers?
Financial influencers or ‘finfluencers’ are a major social media trend at the moment.
With millions of followers across platforms such as Instagram, TikTok, YouTube and elsewhere, these people purport to offer anything from small-time money tips to investing advice and financial ‘hacks.’ However the UK’s financial regulator, the Financial Conduct Authority (FCA), alongside the Advertising Standards Agency (ASA), has warned against finfluencers pushing financial products they have no authority on.
Far from helping you or your children with money, these finfluencers often recommend highly risky financial strategies and ideas that range from unregulated cryptocurrencies to straight up scams. Sarah Pritchard, executive director, Markets at the FCA comments: “We’ve seen more cases of influencers touting products that they shouldn’t be. “They are often doing this without knowledge of the rules and without understanding of the harm they could cause their followers. “We want to work with influencers so they keep on the right side of the law, as this will also help protect people from being shown scams or investments that are too risky.”
Can you trust finfluencers?
Finfluencers have become something of a global phenomenon in recent years, with millions of followers and a global reach. However, it is precisely this global reach that creates the first issues for anyone listening to what they have to say.
Top finfluencers such as Humphrey Yang, Tori Dunlap or Taylor Price have combined followings of nearly 100 million people. The first issue with these three is all are US-based. So, any information they pass on is likely not useful for anyone in the UK anyway. Also looking at their CVs, while Humphrey Yang says he’s an “ex financial adviser”, neither Dunlap nor Price appear to have any particular financial qualifications.
This phenomenon doesn’t stop with dedicated finfluencers however. Regular ‘influencers’ who routinely talk about areas such as beauty, food, travel and leisure are often paid by companies to promote products. Sometimes these can be innocuous things like face creams or clothing, but frequently people can be seen promoting financial products or investments that are wholly inappropriate. This is the nub of the campaign from the FCA which is warning against such activity.
The FCA partnered with well-known influencer Sharon Gaffka, famous for her stint on Love Island, in the campaign, who added: “When you leave a show like Love Island, you are bombarded with opportunities to promote products and work with brands, if like me, you’re new to this kind of work, it can be a little bit overwhelming. “This campaign with the FCA and ASA will hopefully make sure other influencers stay on the right side of the law and prevent them from unknowingly introducing their followers to scams or high-risk investments.”
Why financial advice matters
The allure of finfluencers is that they are easy to access and create content that is engaging – designed to capture your attention and make big claims based on spurious ideas. The reality of good financial management and long-term wealth growth is clear and concise planning and advice over many years, that takes into account different products, investment and strategies to achieve the strongest growth, income and tax efficient outcomes.
It’s essential that you speak to a financial adviser to ensure the best outcomes for your money. Conversely, if you have children who are achieving life goals such as home ownership and even saving for the future, it is important to bring them along on the journey too. This way they will have the best understanding of your plans, and how they factor in, and could benefit too.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 16th May 2023.
Energy market update: what’s happening to household bills
Households have come through Winter and things could be looking up for energy bills. The threat of power cuts failed to materialise, but many households would have felt the pinch as monthly direct debits soared to cover rising prices.
Now as we look towards Summer, the energy market and the Government’s response to the crisis is taking on a new dimension.
Ofgem price cap
The main measure to manage price stability for household energy bills has been in place for several years already – a price cap set by the energy market regulator Ofgem. It currently stands at £3,280, having taken effect from 1 April. This is down from the previous cap of £4,279. It is important to note however that bills will vary and these figures are an average used by Ofgem, and the cap actually applies to the kilowatt hours (kWh) used by a home, plus standing charges.
While it is good news that the price cap has been lowered, in practice it is still much higher than previous cap levels – thanks to high energy costs caused by excess post-pandemic demand and the conflict in Ukraine.
Energy Price Guarantee
Although it’s important to be aware of the price cap level, it is currently moot thanks to the Government’s additional Energy Price Guarantee (EPG), which was created to protect households from soaring costs last Winter.
Initially, the Government set the EPG at £2,500 per household. This was calculated like the price cap, keeping the cost per kWh lower than the market price – effectively subsidising household bills. The EPG was set to rise to £3,000 in April, but at the Spring Budget Chancellor Jeremy Hunt confirmed it would be maintained at the same initial level until June this year. The Government has also been paying a £400 rebate to all households, which should have been arriving monthly in the bill payer’s bank account over six months in payments of around £67.
Energy price outlook
The Government’s EPG is set to end in June. However, it looks increasingly likely that Ofgem will set a new price cap at this point below the EPG level anyway – rendering it effectively unnecessary. This is chiefly thanks to easing of the energy price shock and the market normalising, as it adapts to the new environment after Russia’s invasion of Ukraine.
In terms of actual prices to expect, this is subject to change, but current estimates from Cornwall Insight, an energy market analysis firm, suggest a new price cap of £2,024 in July this year, and £2,074 from October. This is of course subject to change as the market develops, but hopefully the direction of travel will continue downward for now, particularly if the global economy shows signs of weakness in the months ahead.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 20th April 2023.
The ins and outs of insurance protection
Insurance protection is an often-overlooked aspect of good wealth management. While we’re able to control our proactive wealth growth through saving, tax planning and other wealth tools, personal protection cover looks after what we can’t control. It is a critical aspect of an overall portfolio and should be a key consideration for anyone looking to ensure their loved ones are taken care of should the worst happen.
What do we mean when we talk about “protection?”
Insurance protection comes in a few different formats. This isn’t travel, home or car insurance which are all typical everyday insurance policies we buy through comparison sites. These kinds of policies underwrite you, your earnings and your future longevity.
What kinds of policies are there?
Life Insurance
Life insurance is perhaps the best-known protection policy but can vary in a few ways. Life insurance pays out a lump sum to a nominated person or persons should you die unexpectedly. The lump sum can vary depending on the policy you obtain, but it is common for cheaper policies to only cover outstanding major debts such as a mortgage.
You can opt for the level of pay-out you want; however, this will be reflected in the monthly payments you have to make. It is also possible to opt for a policy that pays regular payments rather than a lump sum. The proceeds of a life insurance pay-out are tax-free, but if your partner were to receive a large cash lump sum, inheritance tax could be a future consideration for them.
Income protection
Income protection is designed to pay out if you fall ill or suffer an injury which leaves you unable to work. Income protection typically pays out regular payments that, assuming you have the correct level of cover, should take care of your essential living costs should you be unable to work. This is particularly important if you don’t have savings to fall back on or have regular payments such as a mortgage that you would not be able to pay, were you to be unable to work due to ill health.
Income protection can pay out continuously until retirement if you become unable to work over the long term. Payments are tax free and multiple claims can often be made.
Critical illness
Critical illness insurance is a policy designed to pay if you fall sick with a major illness such as cancer, stroke or heart attack, or if you suffer a life-changing injury that prevents you from being able to work. However, the key difference with income protection is that critical illness cover only covers a list of illnesses specified in the policy, typically the most common kinds of serious illnesses.
The benefit of critical illness insurance is that it is generally cheaper than income protection, which is a broader policy. You will receive a tax-free lump sum pay out should you fall ill with one of the covered conditions, and partial pay outs can generally be claimed if you fall ill with a less serious condition. Some plans cover children in your policy too.
How much cover do I need?
The level of cover you need should be whatever you feel comfortable would take care of your needs, while meeting an acceptable monthly premium cost. As a rule of thumb, start with any major payments such as the mortgage and calculate from there how much you think you would need were you unable to work, or how much your partner or children might need to ensure they can continue to live in the family home.
Life insurance is really important if you have dependents, be they a partner or children. However, if your partner could cover the mortgage without your income and you don’t have dependent children, it might not be a necessary policy. It is also important to check with your workplace whether you have some kind of death in service benefit in place. This can sometimes negate the need for, or reduce the cover required for your policy.
What affects protection costs?
The costs of protection come down to your personal circumstances. In the first instance, the level of cover you require, and the longevity of that cover, will determine the cost of the policy premiums. Beyond that, a series of other factors matter too. Insurers will assess you based on your age, weight, pre-existing health conditions and your family medical history. They will also take into account other lifestyle factors such as whether you engage in extreme or dangerous sports, whether you work in a dangerous job or if you smoke. All of these can increase your ultimate premium levels.
An insurer will consider your marital status, how many dependents you have, your living costs and debts before suggesting any policy level. This can be very tricky to assess. If you would like to talk about your cover options or anything else related to your long-term wealth journey, don’t hesitate to get in touch.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 20th April 2023.
The World In A Week - US data spreading optimism
Written by Ilaria Massei.
Last week saw a heavy economic calendar in the US, with the release of many economic indicators contributing to a boost in market sentiment. Inflation data showed a fall in the year-over-year increase in the Personal Consumption Expenditures Price Index (PCE), calming concerns about rising prices. Weekly jobless claims dropped significantly and continuing claims also surprised on the downside and fell back to a four-month low. Consumer sentiment also improved, attributed to the resolution of the debt ceiling standoff and positive feelings regarding softening inflation. Durable goods orders and new home sales both exceeded expectations, indicating strength in business investment and the housing market.
In the Eurozone, annual inflation continued to slow in June from 6.1% in May to 5.5%, marking the third consecutive month of deceleration. Reports from the European Central Bank’s annual Forum on Central banking suggested the likelihood of another interest rate increase in July, acknowledging that the battle against high inflation is proceeding.
On the same note, the Bank of England Governor Andrew Bailey said that the UK interest rates are likely to stay higher for longer than financial markets expect.
Elsewhere, China’s economic data are only showing a partial recovery, with domestic travel increased by 89.1% compared to the previous year but remaining 22.8% below pre-pandemic levels in 2019. Industrial profits are also not encouraging , with a decline of 18.8% year-over-year in the first five months of 2023.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 3rd July 2023.
© 2023 YOU Asset Management. All rights reserved.