Financial Markets Commentary

November 2023

• The War in Gaza has affected markets by reinforcing current trends as pointed out by Buttonwood in the Economist
  • Interest rates in the US and the UK did not rise this month
  • The yield curve (a forecasting tool that predicts future interest rates) is predicting “higher rates for longer” and has been for some time but it seems the market has just caught on to this and this is starting to worry investors
    • Yields on US Treasuries continue to climb it seems no one wants to buy US treasuries, but everyone wants to sell them. This may have something to do with UD debt being out of control and is reminiscent of the UK gilt market when Liz Truss and her chancellor introduced their budget
      • Notwithstanding the above inflation and interest rates may be at their peak
    • Whilst a soft landing (mild recession) is being predicted in the US and Europe a harder landing (deeper recession) is predicted for the UK
    • UK property prices continue to slide
  • Our portfolios are holding up well because
    • We have been using money market funds which invest in short term instruments and provide good yields
    • Investing in underlying assets directly i.e., government gilts and high-quality corporate bonds
    • We are starting to insert structured products into our portfolios because by doing so will introduce a certainty ingredient
    • We have been investing client capital in high quality companies with deep pockets
    • We have continued to invest in tech
    • Property funds are coming under pressure but mostly open-ended varieties, we tend to use close ended funds
  • Our portfolios use fixed interest and fixed interest investments suffer when interest rates are high and there is more supply – this affects their value negatively. It should be remembered however with fixed interest you get your money back at maturity not the case with other investments so it’s a matter of holding these investments until interest rates start to come down or the investment matures

Please note that:

• This information in isolation is not financial advice.
• Past Performance of investments is not to be relied on and the value and the income from investments can go up as well as down.
• It is advisable to regularly review your investments.

Gianni Campopiano
Managing Director & Chartered Financial Planner