The Bank of England cliff edge

The noise

• US Consumer Prices increased more than expected in September and underlying inflation pressures continued to build up, reinforcing expectations that the Federal Reserve will deliver a fourth 75-bps points interest rate hike next month. CPI rose 0.4% last month after gaining 0.1% in August.

• The Bank of England’s emergency intervention to restore confidence in government finances by propping up pension funds was predicted to draw to a close on Friday. The two-week intervention saw the government buying $65bn long-dated government bonds with the aim to increase bond prices to push down yields. We await to see what next week’s policy is.

• Kwasi Kwarteng cut short his visit to the International Monetary Fund to attend an emergency in-person government meeting to address the country’s economic crisis. Economists are predicting a U-turn on the £43bn of unfunded tax cuts in a bid by politicians to restore confidence in the UK’s finances.
   

The numbers

The nuance

With the yield on government debt and high-grade investment credit looking very attractive we would almost like no solution to be found with whatever the perceived problem is. We are content to sit and earn 6-8% on the core low risk part of our portfolios and wait with patience, assessing how the economy is evolving.

In the near-term corporate earnings are likely to come under pressure but our focus is squarely on those businesses that have strong longer-term prospects. It is important to filter out short-term noise. While government and the central banks’ policies seem to change from week to week, we see it as rather futile to predict the latest whims of politicians and instead, take comfort from the fact our portfolios are positioned appropriately for the uncertainty that lies ahead.
 

Quote of the week

“We have been blown away by the widespread excitement and conversation around the Cadbury Mystery Bars competition.”

Pippa Rodgers, Cadbury Brand Manager
 

Throughout the summer of 2022, chocolate fans all across the UK have been debating over the identity of Cadbury's mystery flavour chocolate bars.

Now the confectionary giant has revealed the identity of its two mystery flavours, and those who guessed correctly are in with a chance to win mystery prizes worth £5,000. The first flavour is rhubarb and custard, while the second is blue raspberry slushies. According to the company, two lucky winners will receive their prizes following the draw after more than 300,000 took part in the taste-test competition. Unfortunately, not everyone guessed successfully, with only 6,861 sussing out both of the flavours correctly, the Mirror reports.

The chocolate giant noted that people from London submitted the highest number of correct guesses with those from Birmingham and Manchester coming in joint second. In the race to figure out the mysterious flavours, all kinds of quirky suggestions were offered. For example,  some guessed apple crumble and Bakewell Slive whilst others guessed rosewater, pear drops and Turkish Delight.

Source: The Metro, Manchester Evening News

 

All investment views are presented for information only and are not a personal recommendation to buy or sell. Past performance is not a reliable indicator of future returns, investing involves risk and the value of investments, and the income from them, may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested. Any views expressed are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness by atomos. Any expressions of opinion are subject to change without notice.