The latest financial markets update from Thomas Carroll’s Wealth Management team, in conjunction with our research partner, Square Mile, has landed.
Summary of Our Market Update
It is too early to judge if inflation is transitory or entrenched but this is the economic measure with the greatest power to determine the course of financial markets over the next year.
Return expectations for government and high-quality corporate bonds are modest at best. Lower quality bonds are richly priced and, in our judgement, offer inadequate compensation for the risk of default. We favour bond funds with flexible mandates which can cherry-pick the best opportunities across the wide spectrum of bond markets.
Equities remain our most favoured asset class. However, our enthusiasm is tempered by lofty valuations, the squeeze on corporate profit margins from higher wage, energy and raw material costs and higher tax rates. It would require a significant fall in stock markets for us to consider increasing exposure.