The first half of the year has seen some events which we did not expect at all: notably, problems in the banking sector and the collapse of Silicon Valley Bank and Credit Suisse. Although, at the time, they caused much market disruption, the impact on financial markets was short-lived. The trajectory of central bank policy rates seems to have been largely unaffected. Notably, the US Federal Reserve has continued with rate increases. Global bond returns have been positive; and equity markets surprisingly strong.
As we enter the second half of 2023, we review our 10 themes for the year. Economic developments – inflation and growth – are progressing broadly as we expected. Our favouring of the consumer discretionary sector and of investment grade bonds have also worked out as we thought. But our preference for small cap stocks and emerging markets have not done so well. The dollar’s exchange rate index has been broadly flat.
Watch the video and click here to read our Mid-year review.