Two Minute Missive - 19th December
Watch the latest ‘Two Minute Missive’ from our Client Investment Director, Shane Balkham.
This video contains the opinions and views of Shane Balkham. Please work with your financial planner before undertaking any investments.
The World In A Week - Easterly winds
Written by Cormac Nevin
In recent weeks, two major Asian economies, Japan and China, have been quietly making the economic and market weather for the rest of the world.
Japan’s government bond market has been at the centre of attention. For years, Japanese interest rates were kept extremely low, with the central bank buying huge amounts of government bonds to stabilise the system. Recently, markets have begun to test whether this long-standing policy can continue. Yields on Japanese government bonds have moved more sharply than usual as investors anticipate that the Bank of Japan may eventually allow rates to rise. This shift matters globally: Japan is one of the world’s largest sources of overseas capital. Higher domestic interest rates on offer can draw money back home, meaning interest rates also rise in other parts of the world and currencies re-adjust, adding volatility to international markets.
China, meanwhile, has been steering global conditions through its balance of trade. New data this morning confirmed that China has exported over $1 trillion more in goods than it imported over the first eleven months of the year. On the surface, that looks like economic strength, but it also tells a story of weak domestic demand. Chinese consumers and businesses remain cautious. Notably, exports to the US have softened, but shipments to Europe, Asia, and emerging markets have risen sharply. This dynamic adds to global supply, helping ease price pressures, but dampens growth for countries reliant on Chinese demand. Unsurprisingly, France’s President Emmanuel Macron has floated the possibility of EU tariffs in response.
China’s Politburo - the top decision-making body of the Chinese Communist Party, made up of senior leaders - has pronounced that stimulating domestic demand, rather than export-oriented growth, is their top priority for 2026. Actions speak louder than words, however. China has been trying to boost domestic demand for some time, but the fundamental reality of the coming century is that China’s working-age population is currently falling and will collapse at an accelerating rate to be down by -25% from the present level come 2050. A structural deficiency of global aggregate demand has the potential to be the ongoing story of the coming decades.
In this environment, a globally diversified portfolio remains the most effective way to capture opportunities. Emerging market bonds and equities may benefit from lower inflation and a softer US dollar; likewise, certain Japanese equities could gain from higher interest rates and a stronger yen. Exposure to assets that thrive under different economic regimes is, in our view, increasingly important as the decades ahead may differ markedly from those recently behind us.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 8th December 2025.
© 2025 YOU Asset Management. All rights reserved.
Two Minute Missive - 4th December
Watch the latest ‘Two Minute Missive’ from our Client Investment Director, Shane Balkham.
This video contains the opinions and views of Shane Balkham. Please work with your financial planner before undertaking any investments.
The World In A Week - Some clarity in uncertainty, at least in the short term
Written by Ashwin Gurung
Last week, the UK Government announced the much-anticipated Budget, setting out how it plans to raise money and manage public spending over the coming years, while aiming to rebuild confidence after a period of weaker economic growth. The Budget delivered no major surprises and included around £26 billion in additional tax revenue, addressing earlier concerns about a potential ‘black hole’ in the UK public finances. This allowed the Office for Budget Responsibility (OBR) to estimate that the government has around £22 billion of “fiscal headroom” – the margin by which its plans remain within its fiscal rules, providing a buffer for extra spending or tax cuts without breaching its commitment to budget stability.
The OBR expects the UK economy to grow by 1.5% in 2025, before slowing to 1.4% in 2026, signalling a somewhat weaker outlook. Inflation is expected to remain above earlier forecasts, 3.5% in 2025, before easing to 2.5% in 2026, meaning the cost of everyday goods and services is likely to remain relatively high in the near term.
While the economic outlook was somewhat soft, it largely came as expected. With no major surprises in the UK Budget, it helped somewhat ease near-term uncertainty over public finances, resulting in a calm UK bond market. This contrasts with September 2022, when Chancellor Kwarteng’s mini-Budget triggered a sharp market sell-off due to unfunded tax cuts and fears of reckless spending. UK government bonds have attracted significant investor interest recently. That said, we still view UK government bonds as relatively less attractive compared with global bonds or local-currency emerging market bonds, given the unique challenges the country faces and the fact that the potential returns don’t clearly compensate for the risks and liquidity constraints.
Meanwhile, UK equities reacted somewhat more positively, as some sectors, such as banks, benefited as the Chancellor decided against imposing additional levies on their profits, which partly drove the FTSE All-Share Index up +2.2% over the week, with Financials representing 28%. The FTSE 250 Index, which is more closely tied to the UK economy, also rose +3.8% over the week.
In the US, markets were lifted by growing confidence that the Federal Reserve (“The Fed”) may cut interest rates in December. The odds of a cut have jumped sharply in recent weeks, with markets now pricing in an 88% probability, while the Fed continues to weigh the trade-off between supporting the labour market and keeping inflation in check. Smaller, US-focused companies did particularly well, with the Russell 2000 Index up +4.2%, while longer-dated Treasury bonds also gained, as the Bloomberg US Treasury 20+ Years USD Index rose +0.8% in USD terms. Meanwhile, tech giants held their ground, with the Nasdaq-100 Index returning +3.6%, despite ongoing talk about a potential AI “bubble”.
Elsewhere, Japanese markets were supported by stronger-than-expected retail sales and industrial production, with the MSCI Japan Index rising +1.4%. During the week, the Japanese government also finalised a $117 billion supplementary budget, mostly financed through new debt, which added further pressure on the yen given Japan’s already stretched public finances. Persistent yen weakness and above-target inflation have raised expectations of a possible Bank of Japan interest rate hike in December.
This year’s broad mix of evolving market themes continues to highlight the importance of a diversified and disciplined investment approach as the most effective way to navigate ongoing uncertainty.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 1st December 2025.
© 2025 YOU Asset Management. All rights reserved.
The World In A Week - Stale data is not the dish the Federal Reserve wanted served
Written by Shane Balkham
The past few weeks have seen the media vultures circling over the AI-driven technology stocks, as investors took profits and global equities remained under pressure, waiting for the bellwether results from Nvidia. Nvidia’s results were strong, with the near-term outlook for its chips remaining robust, however, that is where the weakness lies. In order to sustain the current valuation, Nvidia needs the requirement for its products to remain high, as any sign of cooling demand could have investors questioning its dominance.
Nvidia’s shares initially rallied on the results, as did global equities, but slid backwards over the rest of the week. Global equities are down for the month of November, as the uncertainty of the impact of the US government’s closure and the sustainability of the AI-driven market weighed heavily on investors.
We wrote about the reopening of the US government in last week’s publication, and that means we are now seeing economic data being published. The problem is as the US government was shut for over six weeks, the data being published is stale. The September jobs report showed that although 119,000 jobs were added, much greater than the consensus expectation of 53,000 jobs, unemployment reached its highest level for four years. To add to the gloom, the prior two months’ results were revised downwards by 33,000. This will complicate the Federal Reserve’s decision on whether to cut interest rates next month. Making matters worse for the members of the Federal Open Market Committee (FOMC), the US Bureau of Labor Statistics (BLS) confirmed that it will be cancelling both its October consumer price index (CPI) report and October employment report. This was mainly due to being unable to retrospectively gather and obtain some data that was not collected during the government shutdown. The next inflation and jobs report, for November, will be issued on 18th December, after the FOMC meeting.
The odds of a rate cut by the Federal Reserve have dropped significantly, despite President Trump’s very public rebuking of both Jerome Powell (Chairman of the Federal Reserve) and Scott Bessent (Secretary of the Treasury) for not delivering on lower interest rates. If the decisions by the Federal Reserve are heavily based on data, and that data is either stale or not available until after their next meeting, it seems unlikely the committee with have enough confidence in the state of the US economy to deliver the presidentially desired rate cut.
Last week was not all about the US. In the UK, we had our latest and freshest data release for inflation in the UK. The Consumer Prices Index (CPI) rose by 3.6% in the 12 months to October 2025, down from 3.8% in September. Inflation had been static over the third quarter at 3.8%, which matched the forecasts from the Bank of England, which, in its latest report, had judged inflation to have peaked. The largest contributor to driving inflation down was gas and electricity prices, which rose by less than this time last year. Food prices are still the primary component of pushing inflation up.
So, this slight drop tallies with the expectations of the Bank of England, which is also seeing an easing of growth in the UK and some weakening in the labour market. Although the direction of travel is improving, the wider economic backdrop does remain fragile. Evidence of reducing inflation is welcome, however, subdued economic growth and a fading labour market does leave the UK at risk.
However, the UK stock market has been resilient, with the FTSE All Share delivering strong double-digit returns year to date. The spread of returns across regional equities has been a significant factor this year, the opposite of last year, which saw US equities as the dominant asset class.
Being appropriately diversified over the long term continues to deliver strong outcomes for our clients, particularly during periods of market stress, where keeping your head and staying invested is the right course of action.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 24th November 2025.
© 2025 YOU Asset Management. All rights reserved.
Two Minute Missive - 20th November
Watch the latest ‘Two Minute Missive’ from our Client Investment Director, Shane Balkham.
This video contains the opinions and views of Shane Balkham. Please work with your financial planner before undertaking any investments.
The World In A Week - US government reopens but volatility rises as tech weakens
Written by Dominic Williams
Global equity markets ended the week on a subdued note, with the MSCI All Country World Index edging up +0.5%, as investors rotated out of AI-driven tech stocks, triggering sector-specific selling. Volatility was amplified by the US government’s reopening after its record 43-day shutdown. Mixed economic data across regions curbed enthusiasm and prompted investors to dial back exposure to technology and other fast-growing companies, which have seen strong gains.
In the UK, the economic outlook remained lacklustre ahead of Chancellor Rachel Reeves' Autumn Budget on 26 November. Revised official figures confirmed Q3 GDP growth of only +0.1% quarter-on-quarter, coming in below the +0.2% consensus forecast. This followed flat output in August and a contraction in September, in part due to disruptions like the cyber-attack on Jaguar Land Rover that curtailed vehicle production. The unemployment rate climbed more than anticipated to 5% over the three months to September, the highest level in four years. Payroll numbers fell, and wage growth moderated to 4.6%. This evidence of labour market softening has heightened the probability of a Bank of England rate cut in December. The shrinking workforce also signals weaker tax revenues, intensifying the budget's challenges and the risk of tighter spending to avoid market backlash. However, the Office for Budget Responsibility (OBR) has marginally upgraded its forecasts for the UK economy, giving the Chancellor a little more room to manoeuvre. These improved projections mean the government may have slightly higher tax revenues, which could help soften the impact of difficult budget decisions. UK equities held steady in this environment, with the FTSE All Share Index ticking up +0.3% and the more domestically oriented FTSE 250 matching that gain at +0.3%.
Japan stood out for its resilience, with the MSCI Japan advancing +1.1% amid broader global jitters. While AI concerns weighed on the Japanese tech sector, policy expectations under the new Prime Minister Sanae Takaichi provided a boost. She is expected to pursue pro-growth policies and favour a more cautious approach to raising interest rates by the Bank of Japan. Europe also delivered a strong performance, with the MSCI Europe ex-UK index rising by +2.9% over the week.
In the US, the 43-day government shutdown ended mid-week with House approval of funding through January, averting deeper disruption but revealing the backlog of delayed data, such as the much-anticipated September jobs report, which will be released on 20th November. Initial relief faded, and volatility increased as investors awaited the release of backlogged economic data and started to question the sustainability of the AI boom. Major tech names were hit hard, including Nvidia, which ended the week down -4.5% as investors grew concerned about valuations and what level of return companies will earn on the staggeringly large investments in AI. The S&P 500 ended the week up +0.2% but the tech-heavy Nasdaq 100 index fell -0.1% over the week, reflecting concerns on AI tech-stocks names.
Overall, the week laid bare vulnerabilities in tech dominance and the uneven path of policy normalisation, even as monetary tailwinds offered some offset. In this fluid setting, a diversified and disciplined investment approach remains the preferred approach to mitigating risks and capturing opportunities.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 17th November 2025.
© 2025 YOU Asset Management. All rights reserved.
The World In A Week - Diversifying your basket
Written by Millan Chauhan
The Bank of England’s Monetary Policy Committee voted narrowly to maintain interest rates at 4%, with five members favouring a hold and four advocating for a cut. Governor Andrew Bailey signalled a commitment to lowering interest rates gradually, noting that inflation appears to have peaked. This has increased expectations for a potential rate reduction at the Committee’s final meeting of the year in December.
Last week, US equity markets experienced declines, with the S&P 500 decreasing by 1.7%, largely due to weakness in technology stocks. The Nasdaq-100, which is heavily weighted toward technology firms, fell by 3.2%. The sell-off was driven by worries about high valuations in these technology companies and a decline in consumer confidence during October. Investment into Artificial Intelligence (AI) has remained strong with major technology companies, including Alphabet, Amazon, Meta, and Google, collectively reporting $112 billion in capital expenditures for the third quarter. These investments are primarily directed toward Graphics Processing Unit (GPU) acquisitions and infrastructure enhancements, which are intended to drive AI integration and improve productivity and efficiency. This sustained commitment has played a significant role in driving up the valuations and prices of these technology companies. This capital expenditure has also positively impacted infrastructure assets, especially electric utilities, which play a crucial role in meeting the rising energy requirements associated with AI hardware.
Historically, infrastructure assets have provided strong diversification benefits compared to global equities, often acting defensively during stock market downturns, while also offering effective inflation protection and an attractive dividend yield. For instance, last week the Nasdaq-100 dropped by 3.2%, but infrastructure assets, as measured by the S&P Global Infrastructure GBP Hedged Index, rose by 0.9%. This clearly demonstrates how portfolio diversification plays a crucial role in achieving positive outcomes.
The United States federal government has now been shut down for 38 days, constituting the longest closure in history. This situation has limited access to official government data and increased reliance on alternative reports from the private sector. For instance, last Wednesday’s ADP employment report indicated that private employers added 42,000 jobs over the past month, representing an improvement after two consecutive months of job losses. However, a separate report released last Thursday by Challenger, Gray & Christmas stated that US employers have announced nearly 1.1 million job cuts year-to-date through October, a 65% increase compared to the same period last year and a 44% rise over the total number of cuts in 2024. In October alone, 153,074 job cuts were reported, marking the highest figure for that month since 2003. These developments present considerable challenges for the Federal Reserve as it assesses the state of the labour market and the broader economy in advance of their final meeting of the year in December. In light of the conflicting economic indicators, markets are assessing whether the Federal Reserve will implement a rate cut next month or maintain current rates amid the continued uncertainty.
Although global markets experienced a downturn last week, we would like to emphasise the advantages of remaining invested, as attempting to time the markets is often extremely challenging.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 10th November 2025.
© 2025 YOU Asset Management. All rights reserved.
Two Minute Missive - 7th November
Watch the latest ‘Two Minute Missive’ from our Client Investment Director, Shane Balkham.
This video contains the opinions and views of Shane Balkham. Please work with your financial planner before undertaking any investments.
The World In A Week - Global markets proved there’s life beyond the US
Written by Ilaria Massei
The Federal Reserve (Fed) delivered its final interest rate cut of the year last Wednesday, lowering rates by 25 basis points to a range of 3.5%-3.75%. Fed Chair Jerome Powell said the decision followed an intense debate among the 12 voting members of the Federal Open Market Committee (FOMC). The overriding macroeconomic theme remains the delicate balancing act facing the Fed and other central banks: how to support growth and labour markets while keeping inflation in check.
This conundrum is common to all central banks when making monetary policy decisions - whether to raise, cut, or maintain interest rates. Raising rates is intended to slow economic activity and inflation, while cutting rates aims to stimulate an economy that is slowing excessively, damaging the labour market. The Fed opted to cut rates and Chair Powell made it clear that the decision was driven by an unemployment rate that had “edged up through September”, alongside “downside risks” to the labour market. In addition, the Fed’s latest quarterly economic projections anticipate a sharper decline in inflation next year than previously expected.
Some FOMC members argue that the US economy is no longer creating jobs at a sufficient pace, while others believe persistent inflationary pressures in the services sector - which dominates US economic output - leave the Fed with limited room to reduce borrowing costs further. Ultimately, 9 of the 12 rate-setters supported the cut, with 2 members favouring holding rates steady, and one calling for a larger, half-point cut.
The latest unemployment data were released in November for September, following the US government shutdown, and showed an increase in the unemployment rate to 4.4% - the highest level since October 2021. October’s data will not be released due to data unavailability during the shutdown, meaning the Fed made its decision amid incomplete labour market information, with additional data due to be published tomorrow, 16thDecember.
Another setback last week came from Oracle’s earnings release. The company reported weaker-than-expected revenues on Wednesday and announced a further $15bn increase in planned data-centre investment this year to support artificial intelligence clients. The stock has since given back most of its recent gains, as investors grew concerned about the scale of borrowing and capital spending required to build infrastructure for OpenAI, Oracle’s client and ChatGPT’s creator, as well as questions around the start-up’s ability to meet these contractual commitments over the longer term. Given Oracle’s role within the broader AI ecosystem, the results weighed on sentiment across the sector, contributing to a -2.0% decline in the Nasdaq-100 last week, the index of the largest US technology stocks.
While uncertainty clouds the US outlook for 2026, it is worth remembering that 2025 demonstrated how strong returns can also be generated elsewhere. Overall, it was a positive year for both fixed income and a range of equity markets. Despite a turbulent start to the year driven by US tariff threats, equities across Europe, the UK, Japan, and China are set to close the year with double-digit returns, both in local currencies and for GBP-based investors.
While it is difficult to predict future economic outcomes, 2025 exemplified that a diversified investment approach across regions and asset classes is an effective way to navigate uncertainty.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 15th December 2025.
© 2025 YOU Asset Management. All rights reserved.