Following last week’s excitement over the yield curve inversions in the US and UK – which have been powerful recession predictors in the past – this week saw the return of calmer capital markets. World stock markets have stabilised and, while still reacting quickly to political news flow, the outlook appears to have stabilised too. All eyes were firmly pinned on the US mountain resort of Jackson Hole, where the world’s central bankers have gathered for their annual convention. Given that the ebb and flow of central bank-induced liquidity has driven markets over the past 12 months, this focus is not surprising. Indeed, on Friday, when China’s announcement of retaliatory tariffs soured market sentiment, US central bank chair Jay Powell’s confirmation of continued monetary support was enough to swing stock markets from negative back to positive.
For UK investors barraged by disconcerting Brexit news reports (about how daily life could be seriously derailed – at least temporarily – in the event of a no-deal-Brexit) this positivity in capital markets may be hard to fathom.
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