Royal London Asset Management

While relatively very few of us will have known or have met her, Queen Elizabeth’s passing and the dawning of the Carolean era is momentous.

There was a big rise in UK government bond yields last week, reflecting the inflation data which came in above expectations.

“It never rains but it pours”. A strange saying and metrologically inappropriate at this time. But the gist is that misfortunes come at the same time. The recent heatwave in Europe is a good example.

The Bank of England (BoE) hiked UK bank rate to 1.75% last week, meeting expectations of a 50bps move. The immediate reaction in the market was to take bond yields lower. Why was this?

It may seem like a strange question, but why should fund managers continue to pay attention to third-party investment strategists whose views have not worked out as expected?

I have committed to writing a maximum of 1,000 words in my weekly journal. It should take 5-7 minutes to read – so, by the time you finish reading this, the UK will have incurred about £1.5m in additional debt, equivalent to over £5,000 a second.

A colleague asked me how I would score Boris Johnson. In one sense that’s a pretty open goal: no coherent political philosophy, chaotic management, a trust deficit, record high taxes, inflation at a 40-year high and mountains of debt. However, history may be kinder, especially if Boris writes it.

It was the week of interest rate moves. But with a twist: the US Federal Reserve (Fed) went hard with a 75bps hike, while the Bank of England (BoE) increased rates from 1% to 1.25%.

James Carville, an advisor to President Clinton, was once quoted as saying: “I used to think if there was reincarnation, I wanted to come back as the President or the Pope or a 0.400 baseball hitter. But now I want to come back as the bond market. You can intimidate anybody.”

The BBC really does not get finance and business reporting. Listening to the business slot on Radio 4 last Wednesday morning, it was apparent that they had missed the big news of the previous day.

It was an interesting week for responsible investment. Stuart Kirk put the cat among the pigeons by suggesting that there were more important issues for investors to consider than climate change.

What does ‘business’ mean in various societies and how do attitudes towards business reflect the culture of those societies?

There is a line in the spoof history book ‘1066 and All That’ that refers to the sides in the English Civil War of the 17th century: Cavaliers (Wrong but Wromantic) and the Roundheads (Right but Repulsive). As a child I wanted to be a Cavalier but as an adult I find myself being a Roundhead.

Time for a windfall tax on unearned gains? Yes, according to a lot of the media, with reports highlighting the bumper profits of BP and Shell. The fact that BP made a loss due to the write down of its Russian asset was not widely reported.

Markets took fright of the worsening growth outlook last week. Despite more hawkish noises from the US Federal Reserve, we saw a rally in bonds on Friday, taking 10-year US yields away from the 3% level that looked likely earlier in the week.

What does ESG integration mean for fixed income investors? Let’s park the thorny question of government bonds and look at credit.

Time to reflect on the quarter. Government bonds have been badly impacted by the rise in interest rate expectations, a product of inflation and more hawkish communications from the US Federal Reserve (Fed).

It seems to me that there are really three forms of government: governments which trust their people, governments which don’t trust their people and governments that steal from their people.