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

Guide to the Markets

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Key takeaways:

Lead indicators, such as the purchasing managers’ indices (p. 5, 30), undoubtedly slowed in the second quarter, albeit from above-trend growth levels. 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.

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:

  • Voting at the most recent Monetary Policy Committee (MPC) meeting looked more hawkish, moving from 7-2 in favour of keeping rates on hold to 6-3, with Andy Haldane’s decision to join Michael Saunders and Ian McCafferty in voting for an immediate rate rise increasing the chance of an August hike.
  • 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: a trend we expect to continue in 2018. (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. With unemployment at multi-year lows and a reduction in net inward migration, there appears to be little slack left in the economy. This metric will certainly be closely followed by the MPC.
  • The Bank of England scaled back its projection for GDP growth from 1.8% year on year to 1.4% in the May inflation report, where it also forecast that “an ongoing tightening of monetary policy over the forecast period would be appropriate“ if the economy develops broadly in line with the May Inflation Report projections.

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