The global growth backdrop looks encouraging even after a string of aggressive rate increases last year. The fact that the growth engine is driven by the rest of the world, and not just the U.S., is a positive sign. Anecdotal data from China point towards strong performance after reopening, while European consumers are benefiting from lower energy prices.
The availability of jobs and rise in salaries are underpinning consumer demand. This is a far cry from the sentiment witnessed last year when talk of recession gathered currency. In the U.S., unemployment rate has fallen to 3.4%, the lowest level in more than half a century. The labour market in the U.K. also has a similar story to tell, with pay excluding bonus rising 6.7% in the last three months of 2022.
In March 2022, when the U.S. began raising rates, core inflation was at 6%, well above target, and the U.S. Federal Reserve has hiked its policy rate by 450 basis points since then. Although goods and energy prices have come down, core inflation is still somewhat elevated and sticky. This makes it difficult for central banks to step back and get comfortable with inflation. Purchasing managers’ indices as well as consumer confidence data also show a recovery. It looks like we are headed towards a soft landing and a pause in rate increases is a possibility.
Turning to ESG, the corporate bond market has evolved over the past two years. While green bonds and sustainability-linked bonds commanded a premium earlier, now investors are a lot more discerning. They also question whether the bar set for achieving targets are too low or unambitious. In terms of sovereigns, engagement is a lot more difficult. As a starting point, we screen for human rights and decarbonization.
The value of active minds: independent thinking
Contacte con nosotros
A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.
This document is intended for investment professionals and is not for the use or benefit of other persons, including retail investors, except in Hong Kong. This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. The views expressed are those of the individuals mentioned at the time of writing, are not necessarily those of Jupiter as a whole, and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Holding examples are for illustrative purposes only and are not a recommendation to buy or sell. Issued in the UK by Jupiter Asset Management Limited (JAM), registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. (JAMI), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier. For investors in Hong Kong: Issued by Jupiter Asset Management (Hong Kong) Limited (JAM HK) and has not been reviewed by the Securities and Futures Commission. No part of this document may be reproduced in any manner without the prior permission of JAM/JAMI/JAM HK. 154