Where Are We Headed?
This weekly is on the early side and I am wary of what Friday brings, especially as the debt ceiling saga gives rise to further bond market volatility.
A Global Public Investor Survey was conducted and published last week by the Official Monetary and Financial Institutions Forum. Here’s a summary of some of the key points:
What conclusions can be drawn from all this?
Some argue GPIs have too much money, and are struggling to deploy it in a world where yields are falling and negative real interest rates are rising. The impact of the response to Covid is sending bond yields down while price pressures keep inflation rising.
ESG concerns are still not being taken seriously, with only 1 in 10 saying sustainability is a joint-equal priority, and at least half still doing nothing about it. Instead of GPIs funding large-scale ESG projects, most of the financial legwork towards sustainability may instead come from the private sectors tax burdens.
Despite the influence major central banks have on financial markets, the market crashes of 2008 followed by the response to Covid19 have strengthened their power base. The ownership of bonds and equities by the US Federal Reservce, European Central Bank and Bank of Japan is staggering.
Take a look at the survey here.
The latest report by the Global Sustainable Investment Alliance* shows sustainable investments totalling $35.3TN, 36% of all assets in five (US, Europe, Australasia, Japan & Canada) of the world’s biggest markets. The GSIA commented the growth is being fuelled by rising consumer expectations, strong financial performance and increasing materiality of social and environmental issues.
* Source 1
In the US, Flash July Manufacturing PMI powered ahead to an all-time high of 63.1*(June: 62.1). Services PMI fell sharply to 59.8 (June: 64.6) as firms reported a slowing due to labour shortages and difficulties acquiring stock.
* Source 2
The CBI’s quarterly survey of Manufacturers in the UK* revealed strong expectations for output growth over the next three months, highlighting surging employment and investment in factories but also acute inflation pressures.
* Source 3
While in Australia, June retail sales slumped (-1.8% m/m)* on the back of covid lockdowns and reduced mobility.
* Source 4
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