Investors are continuing to grapple with the future direction of monetary policy from central banks and what it means for investment markets. In last week's newsletter I wrote that...
"The closer investors believe a central bank is to the end of its rate hiking cycle, the better its domestic stock market has tended to perform (in local currency terms) in 2023...
[but]...if investors’ interest rate expectations for key central banks are changing then so will the performance of key stock and bond markets going forward. For example, if a central bank is no longer deemed to be near the end of its rate hiking cycle, then this may be reflected negatively in the domestic stock and bond markets.
It then raises the interesting question of how do different assets perform from a UK investors' point of view throughout the Bank of England rate hiking cycle.
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