A resurgence in investor confidence is again underway as equity markets have risen and bond yields have stabilised, at least in the short-term. How long this lasts will depend on the macro-economic data coming through for GDP growth and the labour market, with many predicting further volatility to come.
To skip or not to skip – this was the Fed’s main dilemma this month. In the US we saw the Fed pause its policy of raising interest rates for this month, opting instead to hold rates as they are. This prompted investors to question Fed Chairman Jerome Powell’s thinking. The Fed’s rhetoric was that although they are skipping an interest rate rise this time, they are on track to raise rates next time. We discuss why this happened and the rationale later in the article.
Cast your mind back to the early 1990s, if you can. John Major was Prime Minister and his successor as Chancellor, Norman Lamont, ran a distinctly different income tax strategy from the current incumbents of 10 and 11 Downing Street. Just how different was highlighted in recent research published by the Institute for Fiscal Studies (IFS).
While markets were panicking about the US debt ceiling last month, they temporarily forgot about interest rates and inflation (phew..!). Now that this issue has been resolved market focus has moved back onto the macro-economic environment.