Its Not Harry

Comment and opinion for retail investors in the UK

Basics

Midweek Musings – will they, won’t they?

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You may guess I am referring to the US Federal Reserve’s imminent decision on US interest rates. The markets are expecting a pause in rate rises, but not the beginning of reductions. What the Fed decides will always impinge on the options open to the UK’s rate setters, because UK rates must line up with US rates if Sterling is not to depreciate: Sterling depreciation is inflationary in the UK.

UK currency pointers (rising Pound) and Gilts pricing (jump up to higher yields) suggest that markets expect the Bank of England to adjust upwards this month, thereby being more hawkish than the Fed

As we will shortly know what the decisions are, I am not going to pontificate on what we can glean about market trajectory yet. I do however still see more of a positive attitude in investor behaviour at the moment.

Scores on the doors?

To fill in for this week, I supply below anwers to some of the questions in my June 1st test! I will slowly work through all the questions. Some require longer answers than others.

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Midweek Musings – ‘gilty’ feelings, part one

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Having offered a succint(ish) refresher on the basics of fixed income investing in the Digging Deeper section of my Monthly Briefing, I have had some feedback from subscribers that some further guidance on researching fixed income funds, and the logical basis for any decision making, might be welcome.

Back to class – it’s September!

This is a big subject and one where I have not offered much training even to those taking my intensive training programme, simply because over the last couple of years, it gradually became obvious that there was an increasing risk (now demonstrated) in owning any fixed income assets for the majority of investors, so no point in spending a lot of time trying to grasp the complexities of an asset class that you could safely ignore!

In essence the textbook case for owning bonds to lower risk had been undermined and it was clear that fixed income assets would not offer much protection when the bull market cycle ended.

As we are now well past the end of the bull market and what was anticipated has come to pass, now is the time to get up to speed on this most technical of the major asset blocks.

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Watching Brief – September 2022

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Pottering About

August was the football commentators’ legendary ‘game of 2 halves’.

The month started with a continuing rise in the value of the major stock markets and even a flurry of meme stock silliness in Bed, Bath and Beyond, exploited ruthlessly by one Ryan Cohen (his actions now being the subject of a class law action, I read). 

The month ended with a very negative reaction to the Fed’s hawkish line on interest rates (surely no real surprise?) and markets losing all the gains they made over the last few weeks.

Have the pessimists turned out to be right? 

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Midweek Musings – Bond is back?

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Not 007, but fixed income assets!

Readers will know that the return of inflation and the actions of central banks to sharply increase interest rates from a low base has had the entirely predictable (and indeed, this actually was predicted accurately by many, including your scribe) effect of trashing the value of longer dated fixed income assets like Gilts and Treasuries, which were valued on the weird assumption that interest rates were going to remain low or even negative for ever.

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Watching Brief – August 2022

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Pottering About

Last August my sub-heading for this introduction suggested some grounds for optimism with a final caveat (Reasons to be Cheerful 1,2 and 2.5).  I fear I may be about to repeat myself in sentiment, although the context is very different.

Last year, I was finding reasons for hoping that a runaway bull market might hold up a little longer.  This year I am going to suggest that we might have seen the end of a serious (and to be honest, long overdue) pull back to reality.

So what are this summer’s reasons to be cheerful and what ought investor’s to be worried about?

[Read more…] about Watching Brief – August 2022