Guide to the Markets - J.P. Morgan Asset Management

Guide to the Markets

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Key takeaways:

After heightened rates volatility in the second quarter, where market pricing for a May hike fell from 90% priced to barely 10% in the run-up to the meeting, the August rate hike was a rather uneventful affair. But the tone was cautious overall, with Bank of England Governor Mark Carney later saying that one hike per year was a good “rule of thumb”.

Guide to the Markets presents a wide range of macroeconomic data that can help liquidity investors assess the economic backdrop and position their portfolios, covering issues such as:

  • Lead indicators, such as the purchasing managers’ indices and GDP (p. 5, 30) have picked up in the quarter. Considering risks of a global slowdown fuelled by a trade war have increased, investment intentions, and consumer and business confidence data, will need to be closely monitored.
  • The currency-induced pick-up in inflation, which has had the effect of squeezing the UK consumer since the Brexit vote, now appears to be falling back towards target: the most recent August print was higher than expected, but on closer inspection, the one-month print was highly influenced by volatile categories such as airfares and recreation (p. 33).
  • We are also starting to witness a pick-up in wage inflation, which certainly feels like it has been a long time coming (p. 32). With unemployment at multi-year lows and a reduction in net inward migration, there appears to be little slack left in the economy.

As you consider these important topics, we will be happy to share our market views and tailor liquidity solutions to best meet your needs.