Bond markets give central bankers a telling off

Last week was generally positive for capital markets, although with one notable difference – this time bond
investors were allowed to join in. Just as energy prices started stabilising, corporate earnings results proved
less supportive than in recent weeks, while macroeconomic data continued documenting the anticipated
slowdown of the global economy. This resulted in a slight deterioration of investors’ growth expectations
for next year, which was not enough to rob equity markets of medium-term support but sufficient to move
bond markets. As we have written here so often recently, bond markets are currently quite influential.


Rishi Sunak tries to look large

Rishi Sunak is on a mission to cut taxes. The Chancellor of the Exchequer feels so strongly about this
mission that he describes it as a “moral” one. He is – as he reminded MPs in his Autumn Budget last week
– a small-state conservative at heart, with a desire to lower taxes and stop the inexorable growth of public
spending. But if the mission is to trim the Treasury’s waistline, the diet only starts tomorrow. Today is the
feast. Because in the same speech where Sunak talked up his fiscal conservatism, he announced the highest
levels of public spending since the 1970s (with the exception of the time since the pandemic), coupled with
Britain’s highest taxes since the 1950s.


COP26: For market support the world needs its leaders to lead

The 2021 United Nations Climate Change Conference, known as COP26, began on Sunday. In September,
Boris Johnson told world leaders at the UN that “it is easy being green” and referenced Kermit the Frog
to reinforce his point. But on Monday, he was downplaying expectations by telling schoolchildren and
reporters in Downing Street that it was “touch and go” whether COP26 would deliver any sort of climate
change breakthrough.

Read the full commentary here