Chart of the Month

November 2020

Data source: Bank of England

The announcement of a further £150bn of gilt purchases by the Bank of England will send the public sector’s contribution to money supply growth to almost £400bn in the 2020-21 financial year, taking the annual growth rate to around 17% by next March.

It would be astonishing if this development did not unsettle the inflation expectations of the UK public.


October 2020

Data source: Eikon Reuters

Over the past 20 years, US consumer confidence, on the Conference Board measure, has enjoyed an impressively tight correlation with the annual change in the S&P500. However, in 2020, a yawning gap has opened up. Despite massive liquidity injections from central banks and governments in the spring, consumers have remained nervous even as the US market rebounded to new highs. Investors should find this divergence disturbing.  

September 2020

Data source: Eikon Reuters

Over recent months, there has been a propensity for strength in the S&P500 index to accompany, or even induce, weakness in the broad US Dollar index, and vice-versa.  As we enter a season when equities have often suffered corrections, sometimes severe ones, Dollars should be considered a protective asset. For investors who are sceptical of the robustness of the equity rally since the March slump, US Dollars offer a  hedge against a sudden reversal.   

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