Market update – April 2023

Executive summary

• The falls in equity and bond markets last year were largely caused by rising interest rates to combat inflation.
• This was one of the fastest-ever rate hiking cycles and has already caused issues such as those related to Silicon Valley Bank and UK pensions after the Autumn “mini budget”.
• Some of the effects of rising rates are yet to feed through into the real economy – for example, there are 2 million fixed-rate mortgages in the UK that are up for renewal this year. There are also signs that credit conditions are tightening.
• With signs of slowing inflation, we think this means rates are near the peak and may even have to be cut again perhaps towards the end of the year.
• Our favoured asset class at present is corporate bonds, where we now get paid a much higher yield. Bonds are also more likely to do well if rates stop going up.

Investment Manager, Mike Deverell, discussed all of this in more detail at our latest Market update event, fill in the form below to access the recording.

If you are an Equilibrium client, you will be able to access this on demand via the client portal.