The World In A Week - Staying the course
Written by Cormac Nevin
Last week witnessed a new all-time high for global equity markets as measured by the MSCI All Country World Index in local and US Dollar terms. For Pound-Sterling based investors, the returns were good albeit still below the peak seen in February due to the strong appreciation of GBP over that period.
We are cognisant that the global indices are now dominated by the US and would highlight that markets such as Japan and Emerging Markets outperformed their global counterparts last week in GBP terms (+1.7% and +1.5% respectively). Fixed Income markets also provided a range of strong returns.
At the halfway point in what has been a tumultuous year for 24-hour news channels, it is worth reflecting how imperceptible the procession of global events have been to the returns of a long-term investor who looks at their Fund valuations monthly (or better still, quarterly).
A large part of the reason market participants became agitated in the first two quarters of the year is likely down to the fact that many are now overexposed to the US market after decades of outperformance, either to the equity market or the US dollar or both. This is particularly true for passive investment strategies which will buy more and more US exposure as its weight in global indices increases.
As we look forward to the latter two quarters of 2025, we are mindful of the value our process possesses by having a range of global exposures which feature healthy allocations to markets such as Japan, Emerging Markets, the UK and Continental Europe. While we have no idea about how specifically the rest of the year will play out, it is certainly plausible that having a range of exposures which are less exposed to the mood of the present occupant of 1600 Pennsylvania Avenue will stand to be a benefit.
Beyond equities, we are mindful of the value added this year by our diversifying asset classes, and see reasons for this to continue. Our blend of Absolute Return managers is up over +5% this year, well more than double the return of UK Cash rates while exhibiting zero sensitivity to the equity market.
Our Real Assets blend is up almost 7% this year, even under conditions whereby inflation has continued to be tame. In Fixed Income, our exposure to local-currency emerging market bonds finished the quarter with returns close to +14% for the year, which has been boosted by the continued weakening of the US Dollar as the result of the administration’s trade policies.
As ever, there is a world of opportunity out there for investors who are sufficiently diversified and long-term-oriented enough to capitalise on them.
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. Past performance is not a guide to future performance.
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 30th June 2025.
© 2025 YOU Asset Management. All rights reserved.
The World In A Week - Trump weighs in
Written by Shane Balkham
Donald Trump joined Israel’s attack on Tehran over the weekend after vowing to keep the US out of new global conflicts. In his typically blunt style, President Trump warned that there will either be peace or tragedy for Iran, as he looks to prevent the country from developing nuclear weapon capability.
The current uncertainty will be the capacity and capability of Iran’s response – the question being whether we will see diplomacy or retaliation from Tehran. Success will be deferred until Iran’s response is clear, however, the foreign minister told reporters that “the door for diplomacy should be always kept open, but this is not the case right now.”
Some politicians in Tehran have called for Iran to close the Strait of Hormuz, to disrupt oil supplies from the Gulf, a vital waterway for bulk shipping. Supply chain disruption is something that the markets have tackled before, with the pandemic, the Evergreen incident in the Suez Canal, and the invasion of Ukraine by Russia.
When geopolitical conflict flares, with the associated frenzied media headlines, we are often reminded just how much the world has changed over the past 10 or 20 years. The US is now a net energy exporter, and as such the implications of any escalation in the Middle East has a less significant impact than in the past. Markets also appear to be bearing this in mind, and little meaningful impact can be observed across equities, bonds, or currencies.
Last week we had the Federal Reserve (Fed), Bank of England (BoE), and Bank of Japan (BoJ) hosting its respective meetings for interest rates. All three central banks held rates at their current position, but all with slightly different reasons. The Fed quoted uncertainty around tariffs and what that might do to inflation and the impact on the US consumer; ultimately the costs around tariffs have to be paid and some of that will undoubtedly fall on the US consumer.
When and by how much is unknown and until the Fed sees more clarity, it will seemingly be holding policy steady. However, given the steady slowdown we observe across a range of US economic metrics, staying at a level of interest rates that is too high for the economy to bear contains its own risks.
The BoE also held interests at their current level, but with two rates cuts already delivered this year (February and May), the committee moved slightly more towards future cuts, and with significantly less direct political pressure, the BoE is looking in a better position than its US counterpart.
The Bank of Japan (BoJ) also held a vote to keep short-term interest rates on hold at 0.5%. Like the Fed and BoE, the BoJ is looking to normalise interest rates, but unlike its counterparts, it is wanting to raise rather than cut. All central banks agree on the same thing, that the short-term remains extremely uncertain for global trade policies and the impact this will have on economic activity and prices.
We continue to remind and reiterate the importance of having a globally diversified portfolio, which has proved to be an effective way of navigating the volatile and quickly evolving global landscape. When uncertainty is prevalent, staying invested is the best course of action.
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 23rd June 2025.
© 2025 YOU Asset Management. All rights reserved.
Two Minute Missive - 20th June
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 - Inflation eases, oil surges
Written by Millan Chauhan
Last week, global equity markets, as measured by the MSCI All Country World Index, fell by 0.6% in GBP terms, amid escalating geopolitical tensions in the Middle East.
Earlier in the week, markets had reacted positively to better-than-expected economic data and improving sentiment around tariff negotiations. In the U.S., inflation came in cooler than anticipated as the Consumer Price Index (CPI) rose by just 0.1% in May, bringing the year-over-year figure to 2.4%.
A closer look at the report reveals that shelter prices, which includes rent and mortgage payments, continued to keep inflation above the Federal Reserve’s 2.0% target. Shelter costs increased by 0.3% on a month-on-month basis and by 3.9% on a year-over-year basis in May.
The Bureau of Labour Statistics Producer Price Index, which is a reflection of prices from domestic producers, also surprised to the downside. This suggested that the price impact from imposed tariffs has been more muted than expected so far. We think it is worth noting that several components within the CPI basket exhibit significant time lags, potentially overstating inflation pressures and failing to reflect real-time price dynamics. Meanwhile, tariff negotiations between the U.S. and China advanced, with an initial agreement poised to increase tariffs to 55% on Chinese imports.
Fixed income markets posted positive returns last week as yields declined in response to cooling U.S. inflation data. High-quality bonds, as measured by the Bloomberg Global Aggregate Index, returned +0.4% in GBP hedged terms. However, the most interest-rate-sensitive segment of the market led the way, with the Bloomberg U.S. Treasury 20+ Year Index gaining +1.1%.
However, on Friday, news emerged that Israel had launched a series of targeted airstrikes on Iran’s nuclear and military infrastructure, as well as on senior Iranian personnel. Markets responded negatively to this development. The escalation of tensions in the Middle East further raised uncertainty, contributing to a sharp rise in oil prices due to fears of a global supply disruption.
Oil prices surged by their fastest pace in three years, with crude prices climbing roughly +12% over the week. Iran, a major global oil exporter, has recently averaged around 1.5 million barrels per day in crude exports, most of which are shipped to Asia, with China as the primary buyer. This oil price rally helped lift the broader commodity index, which rose by +2.0% in GBP hedged terms, as measured by the Bloomberg Commodity Index. In line with its traditional role as a safe-haven asset, gold also gained +3.3% last week, reinforcing its appeal during times of heightened uncertainty.
In an environment of rising global conflict and uncertainty, we continue to believe that diversification across asset classes and investment styles remains the most effective approach to navigating markets.
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 16th June 2025.
© 2025 YOU Asset Management. All rights reserved.
Two Minute Missive - 12th June
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 - Resilience in global equity markets
Written by Ilaria Massei
Last week, global equity markets proved resilient amid a backdrop of mixed economic signals. The MSCI All Country World Index rose +1.1% in GBP terms, reflecting continued investor confidence. Meanwhile, fixed income markets were more volatile, with the Bloomberg Global Aggregate Index falling slightly by -0.2% in GBP Hedged terms.
In the US, Nonfarm payrolls - the number of jobs added or lost, excluding farm work, government, and some other sectors- rose by 139,000 in May, and the annual unemployment rate remained stable at 4.2%. While this is somewhat encouraging for the economy on the surface, the underlying picture was more nuanced, with sizable downward revisions to March and April unemployment figures and a decline in the employment-to-population ratio suggesting some softness in the labour market.
Jobless claims also rose unexpectedly, with initial claims increasing to 247,000, against expectations for a decline. At the same time, business sentiment indicators in the manufacturing and service sectors weakened. The ISM Manufacturing PMI slipped to 48.5, and the ISM Services PMI dropped to 49.9, marking the first contraction in the services sector since June 2024. A reading below 50 means that both US factories and service businesses are shrinking.
In Europe, the outlook was supported by a more benign inflation reading, with the MSCI Europe ex-UK rising +1.1%. The Eurozone Consumer Price Index fell to 1.9% year-on-year in May, down from 2.2% in April and below the European Central Bank’s (ECB) 2.0% target. This supported the ECB’s decision to cut interest rates by 25 basis points in June, in response to updated growth and inflation forecasts.
Meanwhile, Japan faced a more mixed week, with the MSCI Japan Index declining by -2.1% in GBP terms. Nonetheless, structural reforms among corporates continue. Farallon Capital Management – an American multi-strategy hedge fund - has taken a top-three position in one of Japan’s largest insurers (T&D Holdings) and is pushing for faster changes in governance and investment strategy. This move reflects the broader transformation underway in Japan’s corporate landscape - a dynamic that continues to attract global investors’ interest.
In a world undergoing transition, where opportunities vary across geographies and asset classes, we continue to believe that investing in a diversified mix of regions, sectors, and styles is the most effective way to navigate uncertainty and position portfolios for long-term growth.
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 9th June 2025.
© 2025 YOU Asset Management. All rights reserved.
The World In A Week - One door closes and another one opens
Written by Shane Balkham
The US tariffs story took an interesting turn last week. The US Court of International Trade ruled that tariffs imposed using the International Emergency Economic Powers Act are illegal, as applying tariffs relating to fentanyl, illegal immigration, as well as reciprocal tariffs, were inappropriate. However, the Court also offered a lifeline to the Trump administration by stating that other statutes do allow presidential tariff authority.
What this means is President Trump is allowed to impose tariffs, just not in the way he is currently justifying them. This has been appealed by the Trump administration, allowing the current level of tariffs to be collected while the US Court of Appeals considers the case.
The positive aspect of the ruling is that to date, President Trump had been using the emergency powers on an ad hoc, unpredictable basis. Most other trade authorities require a process that is more predictable and structured, which could bring more certainty to countries, companies, and markets.
The negative aspect of this ruling is that it extends the timeline of uncertainty around the future trajectory of US trade policy. It effectively means that negotiations that were underway to try to beat the 9th July deadline, for the 90-day pause on reciprocal tariffs, are likely to be paused. Countries have little reason to negotiate when the Trump administration is awaiting the decision of its tariff powers, meaning a quick end to negotiations is some way off, as Trump can use multiple other legal justifications to impose tariffs.
Treasury Secretary Scott Bessent has insisted the US would never default on its debt as he sought to lessen Wall Street concerns over the state of the country’s public finances. The market has had concerns over the size of the US federal debt as President Trump has urged Congress to push through his “One Big Beautiful Bill Act” which is expected to increase the deficit. The Committee for a Responsible Federal Budget has warned that Trump’s bill would add about $3tn in debt over the next decade. The bill passed the House of Representatives and is now set to be debated by the Senate. The Trump administration has insisted the bill will not increase the deficit and that projections fail to consider increases in economic growth.
But with the US net federal debt-to-GDP already over 100%, and with economic growth slowing materially this year, there is a concern that the US is pushing the limits of bond market tolerance for perpetually high fiscal deficits that continue to increase the debt-to-GDP ratio.
We continue to believe that an appropriate globally diversified portfolio, of different asset classes and investment styles, is the most effective way to navigate the volatile and evolving global landscape. When uncertainty is prevalent, staying invested is the best course of action.
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 2nd June 2025.
© 2025 YOU Asset Management. All rights reserved.
The World In A Week - Deficits, Downgrades and Duties
Written by Cormac Nevin
The S&P 500 Index of large U.S. companies declined by -4.3% last week, breaking a six-day winning streak. This was comprised of a -2.6% fall in the value of the index in U.S. Dollar terms, and a further decrease in the value of the U.S. dollar against the pound sterling. This U.S. underperformance also dragged down global indices, which are now heavily overweight U.S. assets following a decade of outperformance, with the MSCI All Country World Index of global equities falling -3.0% in GBP terms. Other markets were much more stable over the course of the week however, with the MSCI Japan Index up +0.4%, the FTSE All Share Index of UK stocks up +0.2% and the Continental European market only down -0.8% (all in GBP terms).
The latter market was the subject of some volatility towards the end of the week as President Trump announced a significant escalation in trade measures by proposing a 50% tariff on all imports from the European Union, citing dissatisfaction with the pace of ongoing trade negotiations and labelling the existing trade deficit with the EU as “unacceptable”. In addition to the EU tariffs, President Trump targeted the technology sector by threatening a 25% tariff on smartphones not manufactured in the United States, explicitly naming Apple and Samsung. This action aimed to pressure these companies to relocate their manufacturing operations to the U.S.. The immediate market reaction was negative, with Apple shares declining over 6% during the week, contributing to broader market losses given that company’s large weight in the S&P 500 Index (Approx. 6.7%).
Fixed Income markets in the U.S. were also challenged by a lacklustre 20-year bond auction and concerns over the size of the government’s fiscal deficit. This was set against the backdrop of the credit rating agency, Moody’s, downgrading the U.S. credit rating from Aaa to Aa1 citing profligate government spending.
We continue to believe that an appropriately diversified portfolio of global assets, complemented by diversifying alternative investment styles is the best approach to the current market environment, particularly if we are witnessing the end of American exceptionalism in investment performance.
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 19th May 2025.
© 2025 YOU Asset Management. All rights reserved.
Two Minute Missive - 20th May
Midway through Q2, markets reflect ongoing volatility driven by Trump’s trade policies and fiscal concerns. Despite a US credit downgrade, global equities remain positive - highlighting the value of diversification and long-term investment.
Watch the latest 'Two Minute Missive' from our Client Investment Director, Shane Balkham.
https://www.youtube.com/watch?v=iTE0kPaYjsY
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 - The US rallies while the UK is pressured by fiscal uncertainty
Written by Ashwin Gurung
It was a positive week for the US market as positive economic data boosted market sentiment. June’s Non-Farm Payrolls added 147,000 jobs, exceeding the forecast of 110,000, and the unemployment rate fell to 4.1%. However, the decline in unemployment was largely caused by a drop in labour force participation, as some workers have stopped looking for employment and are therefore excluded from the calculation. The Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) also improved to 49%, while the Services PMI rebounded to 50.8%, signalling expansion. PMIs are key indicators of economic health and are based on business surveys, with a reading above 50 indicating expansion, while below 50 suggests contraction. Despite inflation now nearing the Federal Reserve’s 2% target, the strength of recent labour data suggests the Fed is unlikely to cut interest rates as soon as previously expected.
In terms of trade developments, while the US and Vietnam agreed on a new trade deal, setting a 20% tariff on Vietnamese exports (down from a proposed 46%) with no US tariffs in return, there has been little substantial progress in deals with other major trading partners, such as the EU, over the past week. With the 90-day tariff pause expiring on July 9th, and only the UK and Vietnam securing deals, there is growing anxiety around the situation. However, we have seen little evidence of tariff-driven inflation in either real-time data or official figures.
Much of the week’s attention also focused on President Trump’s tax and spending bill, which narrowly passed, including tax cuts, reductions to social welfare programmes, and increased military and immigration enforcement funding. While we don’t base our investment decisions solely on political developments, the bill has sparked debate. It is projected to add $3.3 trillion to the national debt over the next decade, increasing the risk of long-term economic instability and potentially leading to higher interest rates. However, this impact, like the anticipated tariff-driven inflation, remains to be seen.
The US market enjoyed a robust week nonetheless, with the S&P 500 and the more technology-focused Nasdaq-100 reaching record highs, up +2.3% and +2.0%, respectively, in GBP terms. Small and mid-cap companies, as measured by the Russell 2000 Index, surged +4.1% in GBP terms.
Elsewhere, in the UK, Prime Minister Keir Starmer faced a setback as 49 Labour MPs voted against proposed welfare reforms to Universal Credit and the Personal Independence Payments Bill, which aimed to cut disability and low-income benefits to ease fiscal pressures without raising taxes. Public and internal backlash forced Starmer to delay the reforms, leaving Chancellor Rachel Reeves grappling with a £4.8 billion shortfall, without increasing income tax or VAT. This uncertainty triggered a mid-week dip in the Pound Sterling and UK government bonds (gilts), as investors grew concerned about fiscal instability. As a reminder, we currently do not hold any dedicated UK bond managers in our portfolios. This is because, compared to global bonds or local-currency emerging market bonds, we find them less attractive in terms of returns, risk, and liquidity.
Nonetheless, economic indicators showed resilience. The UK economy expanded by 0.7% quarter-on-quarter in Q1 2025, the strongest growth in a year. The housing market also showed early signs of recovery, as the net mortgage approvals rose to 63,032 in May, a key forward-looking indicator of borrowing, recording its first rise this year, even as stamp duty thresholds reverted to pre-2022 levels on April 1. The FTSE 100 Index of large-cap UK-listed stocks posted a modest +0.3% gain. However, the fiscal uncertainty weighed on more domestically focused mid-cap stocks, with the FTSE 250 Index declining -0.6% over the week.
While short-term uncertainty is inevitable, we believe there are significant opportunities for investors who maintain a well-diversified, long-term approach. If you have any concerns, we encourage you to discuss them with your Financial Planner.
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 7th July 2025.
© 2025 YOU Asset Management. All rights reserved.