This month we continue to sit in the coronavirus holding pattern that’s dominated the summer. Coming into the month, lower infection rates have seen lockdown rules relaxed, but this was followed by spikes in infection that required a step back. So far these have been localised, and hopefully improved testing and tracing will keep it that way, we also found room to start talking about Brexit again, with the time to secure a deal before the transition period ends is diminishing rapidly.
It has been noticed that the UK’s government debt has passed £2tn as the continuation of support for the economy continues to grow. Public sector net debt as a percentage of GDP has doubled since the global financial crisis and is at its highest level since the early 1960s. The BoE continues to keep interest rates unchanged at 0.1 per cent and maintained the current size of its bond buying programme. It said it does not expect GDP to reach pre-coronavirus levels until the end of 2021.
Elsewhere we have seen the US election start to hot-up as we enter the final furlong in the race for the White House; we have seen Joe Biden announcing Kamala Harris, the senator from California, as his potential vice president along with Donald Trump formally receiving the nomination from the Republican party.
The US recovery is progressing, if not at the pace we would all want with the figure for new jobless claims contiuing on its downward trend since April, although it remains stubbornly high as the ongoing spread of coronavirus hinders business reopening. Despite all the concerns, equity markets seem to be paying little attention to the bleak economic data with the S&P continuing its rise, with all of its losses erased from the coronavirus sell-off led to the setting of a new all-time high. It has taken just six months for the market to recover all those losses with a large portion of the gains coming from the US tech giants dominating the index.
|Asset Class||Proxy||1-month return||3-month return||6-month return||1yr return|
|Cash||UT Cash/Money Market||0.02%||00.06%||00.44%||-00.02%|
|UK Corporate Bonds||UT UK Fixed Interest||-04.33%||-03.48%||00.49%||-00.70%|
|Emerging Market Equities||MSCI Emerging Markets||00.19%||08.93%||06.11%||04.13%|
|European Equities||MSCI Europe ex UK||02.21%||05.68%||05.31%||-00.08%|
|Gilts||FTSE Gilts All Stocks||-03.06%||-02.68%||01.14%||02.42%|
|Japanese Equities||MSCI Japan||05.49%||-01.82%||04.70%||00.19%|
|UK Equity||FTSE All-Share||02.42%||-01.16%||-07.59%||-12.65%|
|US Equities||S&P 500||05.02%||07.12%||13.80%||10.27%|
*The value of your investment can go up as well as down, you may get back less than you originally invested. Circumstances are subject to change.
Performance from the past or yields quoted should not be considered as reliable indicators of returns. This communication is for general information only and is not intended to be individual advice.