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

Guide to the Markets

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Key takeaways:

With clouds gathering on the global economic horizon, unfortunately UK and Brexit developments are offering no silver lining. Nevertheless, the March Monetary Policy Committee (MPC) meeting of the Bank of England still stuck to the view that a tightening of monetary policy at a gradual pace, and to a limited extent, would be appropriate, if the economy develops in line with the projections as set out in February. However, these projections are based on a smooth transition towards a new trading relationship with the European Union. In other words, they are substantially subject to change depending of the chosen Brexit path.

Given the current uncertainty over the outlook for interest rates, Guide to the Markets presents a wide range of macroeconomic data that can help liquidity investors assess the economic backdrop and position their portfolios. The Guide covers all the major issues for UK investors, including:

  • Lead indicators - Considering that 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. Growth has slowed slightly, but none of this is entirely surprising considering the lack of clarity over Brexit. (p. 5)
  • Inflation - With unemployment remaining at multi-year lows, and with a reduction in net inward migration, there appears to be little slack left in the economy. Wage inflation needs to be carefully monitored; if we do see a softer outcome to Brexit, the Monetary Policy Committee may directly point to this development to justify tightening of policy. (p. 6, 7, 8)

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