Market Matters: September 30, 2023
Risk assets generally declined in Q3 as rising bond yields pressured fixed income and equity performance alike.
Equities
Key Central Bank Policy Rates Approach Cyclical Peak
Over the past two weeks, central banks in the United States, United Kingdom, euro area, and Japan have all held monetary policy meetings. The communications following these meetings retained a hawkish bias, suggesting further policy tightening may be necessary—except for the Bank of Japan—however, additional interest rate hikes will likely be much less frequent for the remainder of this cycle. Despite this reality, we do not think major central banks will be quick to cut interest rates next year.
Do Recent Upward Revisions to the United Kingdom’s GDP Mean the Outlook Is Brighter?
No. Although GDP revisions showing that the UK economy recovered more quickly and strongly from the COVID-19 period than was initially thought are welcome, the country faces headwinds to growth in the coming quarters. We continue to recommend holding UK equities at benchmark weights.
Market Matters: August 31, 2023
Most asset classes declined in August as higher bond yields and mixed economic signals weighed on risk appetite.
Will Japanese Equities Continue to Outperform?
No, we do not think it is likely that Japanese equities can meaningfully outperform in the near term, given growing headwinds from the slowing global manufacturing cycle, possible monetary tightening, and potential Japanese yen strength.
Review of Market Performance: Fiscal Year 2023
Risk assets enjoyed mostly positive returns in fiscal year 2023. Equities rebounded as fears over the severity of a possible recession moderated. Emerging markets equities lagged developed markets as the pace of reopening in China disappointed. Bond performance improved as credit assets posted positive returns but developed markets sovereign bonds struggled. Real assets suffered due to higher interest rates and slowing demand.
Market Matters: July 31, 2023
Risk assets rallied in July as slowing inflation and pockets of economic resilience supported performance.
Is Now a Good Time to Invest in the Energy Transition?
Yes, the transition to a low-carbon economy is producing a myriad of productive ways to put capital to work.
VantagePoint: Investing in a Low-Carbon Future
The energy transition involves a complex and dynamic set of changes in the way we do just about everything. While significant progress has been made in some quarters, considerable capital will be needed to fund the massive investment required over coming decades. We expect investors with a deliberate and thoughtful plan to invest in the transition across the risk/reward spectrum will be rewarded.
Liquidity Hazard Planning for Families of Wealth
Consistently revisiting potential liquidity risk is important work for family investors. To manage liquidity risk, families should employ best practices, monitoring illiquid investments, spending needs, and currency considerations. By doing so, they can guard against unanticipated stressors and remain on track to achieve their investment goals.