Could politics structurally alter the economic backdrop?

With 5 July having marked ten years since the Bank of England (BoE) last raised UK interest rates, we assess the state of the economy and its prospects in light of recent political developments. Although the UK economy has shown resilience since last year’s Brexit referendum, its growth rate decelerated in the first quarter of … Continue reading “Could politics structurally alter the economic backdrop?”

Brexit: One year on

On the first anniversary of the historic vote to leave the European Union, a panel of Schroders’ experts look at the impact the referendum has had on the UK from an economic, fixed income and equity perspective.  When the result of the UK’s EU referendum confirmed that the UK had voted to leave, markets were … Continue reading “Brexit: One year on”

UK election: what a hung parliament means for markets

Following the surprise UK general election result, Schroders’ Alix Stewart,  David Docherty & Azad Zangana, consider the implications for the economy and markets.   The UK general election has resulted in a hung parliament, with no party commanding an overall majority. The Conservatives have emerged as the largest party and will likely seek to form … Continue reading “UK election: what a hung parliament means for markets”

The Times They Are A Changin’…

It was a strange month for global stockmarkets, as March proved not too dissimilar to February in its outcome. With the exception of the US and Japan, which generally moved sideways, most equity markets moved higher. However, this was also echoed by government bond markets, with yields narrowing as investor ebullience over the Trump-driven reflation … Continue reading “The Times They Are A Changin’…”

Theresa May announces UK general election

This morning, UK Prime Minister Theresa May announced the government’s intention to hold a snap general election on 8 June 2017. Parliament will vote to set a date for the election tomorrow, needing a supermajority of two-thirds in favour to pass, although this is expected with the opposition leader Jeremy Corbyn having already welcomed the … Continue reading “Theresa May announces UK general election”

Is populism good for markets?

Populist policies appear good for markets, given the performance of equities following the Brexit and Donald Trump votes. However, we would note that the conditions for a rally (dovish signals from the Federal Reserve (Fed) and signs of a global recovery) were already falling into place last summer, before either of these two events took … Continue reading “Is populism good for markets?”

No Brexit plan – but a clearer destination

Theresa May has given much more detail than previously on what the UK’s negotiating objectives will be when it starts on the road out of the European Union (EU). The speech did not answer all the questions that Britain’s business community and trading partners might have, or remove all of the uncertainties hanging over Britain’s … Continue reading “No Brexit plan – but a clearer destination”

Sterling and US politics take centre stage in October

Sterling endured a torrid October against a backdrop of ongoing uncertainties surrounding the UK’s Brexit plans. The pound fell against the US dollar to reach its lowest level for over 30 years during the month, and against the euro to reach its lowest level since 2011. During October, Prime Minister Theresa May confirmed that she … Continue reading “Sterling and US politics take centre stage in October”

Gilt yields surged during October

UK gilt yields surged and prices fell in October amid waning demand for sterling-denominated assets. During October, the pound reached its lowest level against the euro since 2011 and its lowest level against the US dollar for over thirty years. Nevertheless, despite the ongoing weakness in the pound, the UK’s trade deficit widened during August: … Continue reading “Gilt yields surged during October”

Sterling remained under pressure in October

Sterling remained under pressure in October amid ongoing nervousness about the UK’s Brexit strategy. The pound reached its lowest level against the US dollar for thirty years and its lowest level against the euro since 2011. During the month, Prime Minister Theresa May confirmed that she intends to invoke Article 50 and start the process … Continue reading “Sterling remained under pressure in October”

Sterling work…

With sterling having just plunged to a 31-year low against the US dollar, it’s interesting to note some of the similarities between the UK now and back in 1985. We had a female prime minister at the helm (Margaret Thatcher), while rival political factions vied to take control of the UK’s Labour Party (Neil Kinnock … Continue reading “Sterling work…”

“Hard Brexit” hint sinks sterling, raises relocation risk

Following Prime Minister Theresa May’s suggestion that the UK is heading for a “hard” Brexit, international companies are now more likely to relocate than risk remaining in the country. After months of speculation as to the timing and direction of the UK’s Brexit negotiations, Prime Minister May not only revealed that she plans to trigger … Continue reading ““Hard Brexit” hint sinks sterling, raises relocation risk”

The falling currency: A welcome adjustment?

It turns out we were in a false reality. No-one believed that Brexit was really going to happen. The response to comments by Theresa May at the Conservative Party conference – and the realisation that Brexit is not only going to happen, but likely to be ‘harder’ than expectation – has been a plunge in … Continue reading “The falling currency: A welcome adjustment?”

Return-free risk

Bonds are at the epicentre of what is a highly fragile environment. “Brexit brought forward the size, scale, scope and speed of more monetary policy. No wonder markets are up!” – Former Federal Reserve (Fed) Governor, Kevin Warsh, July 2016 It is often stated that markets hate uncertainty. Like many things this cycle, this notion has been … Continue reading “Return-free risk”