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Month: November 2022

Market Update Monday 28th November 2022

Markets rally on rising hopes of a moderation in the interest rate cycle

Markets made further ground this week as the minutes of the last US Federal Reserve meeting were released, showing a “substantial majority” of officials supporting a moderation in the pace of interest rate increases. Investors looking for evidence to support this view were rewarded with a further contraction in the US manufacturing purchasing managers indices, which provide a window on the operating environment companies find themselves within, including new orders, hiring, and investment intentions. Whilst lower energy prices within the Eurozone have eased concerns over gas rationing this winter, providing a boost to European equities. However, hopes of further easing over China’s zero Covid policy were dashed, with a sharp escalation in the number of recorded infections.

As of 12pm on Friday, London time, US equities, having been closed for Thanksgiving on Thursday, were up 1.6%, with US technology stocks having risen 1.3%. European equities were 1.8% higher, and the UK market rose 1.2%. Japanese and Australian equities followed suit, rising 2.6% and 1.5% respectively. Whilst emerging markets only increased by 0.3%, held back by Hong Kong stocks which dropped 2.3% on rising Covid cases.

Yield curve inversion deepens as recession fears grow, despite hopes of a moderation in rate rises

As expectations hardened to an impending recession, longer-dated haven government bonds rallied, with yields, which move inversely to price, falling. 10-year US Treasury yields are now yielding 3.72%, with German Bund yields standing at 1.95% and UK gilts 3.11%. Whilst shorter-term debt trades at higher yields, this inverted relationship signals recession. 2-year US Treasuries, German Bunds, and UK Gilts currently yield 4.49%, 2.18% and 3.28% respectively. This picture was reinforced by comments made by Isabel Schnabel, a European Central Bank executive board member who signalled her desire for Eurozone rates to rise by 0.75% for a third time in a row to combat inflation. This was despite prices of goods leaving factories falling for the month of October in Germany, the first decrease in two years, following a decline in wholesale energy costs.

Oil price falls on rumours of a supply increase being considered by OPEC

The oil price weakened further, with Brent crude dropping by 1.5%, now priced at $86.3 a barrel, following rumours that OPEC (Organisation of Petroleum Exporting Countries) were considering an output increase to counteract the loss of Russian crude supplies. However, this was subsequently denied, with OPEC reiterating their plans to stick with the current production cuts.

Build your own financial plan

Build your own financial plan

Easier to manage your money

Having a financial plan in place early on can make it easier to manage your money further down the line. It’s never too early to make a financial plan. The sooner you work out your goals and start following a plan to achieve them, the more likely you are to succeed.

Here are three key questions to ask yourself when building a financial plan.

1. What are my goals?

Building wealth takes time and a little effort. Like any activity, be it growing a business or learning a new skill, you need to decide early on what your long-term objectives are. It’s exactly the same when you are building wealth – it is important to set financial goals. Without a goal, your efforts can become disjointed and often confusing. Being able to keep track of your progress towards achieving a goal is only possible if you set one in the first place. Being able to measure progress is extremely rewarding and will help you maintain focus. Procrastination is something we all battle with from time to time. However, when you set goals in life, specific goals for what you want to achieve, it helps you understand that procrastination is dangerous. It is wasted time. It is another day you aren’t moving closer to that goal.

Setting financial goals is essential to financial success. Once you’ve set your goals you can then write and follow a roadmap to realise them. It helps you stay focused and confident that you’re on the right path.

Consider the SMART principle when setting your own goals:

Specific – Clearly define what each goal is and use details such as numbers where possible (quantify it).
Measurable – Think about a tangible way in which you can measure your progress.
Achievable – Are your ambitions realistic? With planning we are often capable of more than we realise but being pragmatic is important. Discussing your goals with us will help you to balance this.
Relevant – Are your goals in line with your own personal values? It is useful to chat this through with somebody else to clarify your values.
Timebound – Think about the timeframe you are working within and whether there is any flexibility needed.

Your goals are personal and unique to you. Perhaps you want to set up your own business and follow a lifelong passion, or maybe you want financial security and to ensure you can pass a legacy on to your loved ones. Once you’ve defined your goals and you’re clear on your current situation, it’s a good time to work out if you have enough to achieve your goals or if there’s a gap. This isn’t an easy task as there are often many variables to consider, such as inflation, tax and growth rates.

2. Where am i now?

Cash flow planning is a concept borrowed from business and every business owner or finance director will be familiar with the term. These same principles can be applied to your personal financial planning. As we’ve mentioned, the starting point is to identify each one of your personal goals. Cash flow planning is most effective when all likely future needs are taken into account too. Just focusing on immediate needs may seem more practical but focusing on one goal at a time can limit future options.

Make a list or a spreadsheet of what you have, specifying where and how much; this could include any assets such as property, cash balances, investments, pensions, protection policies and any debts such as mortgage, credit cards or loans. Look at your income and expenditure levels. Remember, the future is somewhere you have never been before. Cash flow planning guides and updates you on your journey. If there are delays on the way it can find another path. Combined with our professional advice, we can help you arrive at your destination more smoothly.

3. What do I need to do next?

As we’ve seen with the coronavirus (COVID-19) pandemic, things can change very quickly. It goes without saying that your financial plans should not be static objects, and that you should review your plans over time and on a regular basis to ensure that you remain on track towards your goals. You also need to adapt your financial plans as your circumstances change. Reviewing your arrangements regularly is a vital way of ensuring you meet your financial goals and ensures that all your plans are up to date in light of changes to your circumstances and the wider financial landscape.

Reviews can also prompt you to consider some of those things that sometimes get left undone – such as your Will, which might still need to be arranged or updated. Or perhaps there is a Lasting Power of Attorney that has not been progressed or a life assurance policy that should be placed under an appropriate trust. As we’ve all recently experienced, life has a habit of springing unpleasant surprises on us when least expected.

let’s get started
Financial planning is the key to improving your financial wellness. Your personal plan is a roadmap to your financial success. You’ll see exactly what you need to do now to make a significant difference for your future. Please get in touch to find out how we can help you reach your financial goals – we look forward to hearing from you.

Top pension tips if you’re about to retire

Understanding your options and putting a plan in place

We spend our working lives building towards retirement. Choices we make today will have a big impact on the quality of our lives later on. If you only have a handful of years to go until you reach your retirement, it has never been more important to understand your options and put a plan in place – now could be a good time to re-evaluate your plans with us.

The changes made to UK pensions in 2015 mean that we all have more choices available on how to fund our lifestyle in retirement. But decisions surrounding when, why, and how you decide to retire will be very personal and will largely depend on your individual circumstances. These decisions will also be impacted by external factors such as the rising State Pension age, and the impact of the recent pandemic on the job market. When planning for your future, it’s important to know when you can access the money in your pension pot.

If your pension is not on track to give you the income you want in retirement, you need to look at how to boost it. It’s also worth remembering that taking your pension doesn’t mean you need to retire.

Taking stock of your retirement plans

Retirement is a time to reap the rewards of years of hard work and do more of the things that you love, whether that’s travelling the world or spending time with your grandchildren. But to make this a reality, you need to prepare as well as you can financially. This isn’t always easy, as pensions and retirement planning can be complex.

To help you ensure you’re on the right track, ask yourself the following questions. What type of pension/s do I have? Do I have more than one pension pot? If so, where are they? When and how can I access the funds in my pension pots? What is the value of my pension pots? What benefits will they provide me with? What about any other options or guarantees?

Will you potentially exceed the pension lifetime allowance?

If you’re close to retirement, you may find you are approaching the Pension Lifetime Allowance (LTA) limit. The LTA is the most you can accrue overall within your pension plans without incurring an additional tax charge on the excess funds. The LTA test can take place at various times and all funds are tested at some point (for example, when your pension plan is accessed if you die without having accessed it and/or on reaching age 75).

The LTA has been cut over the years and is now £1,073,100 for the 2021/22 tax year. The LTA has also been frozen at £1,073,100 until 2026, potentially exposing you to the charge for breaching the threshold. If you breach the threshold you face a 55% LTA charge on amounts taken above this ceiling if they are withdrawn as a lump sum (with no further income tax due beyond the 55%), or a 25% LTA charge when taken as income which includes placing the funds in a drawdown plan. In addition, any income withdrawn is then taxed at usual income tax rates.

If you think you are nearing the LTA, it’s important to monitor the value of your pensions, and especially the value of changes to any defined benefit (DB) pensions as these can be surprisingly large. DB pensions are valued for LTA purposes as 20 times the annual pension figure, plus the tax-free cash amount, whereas defined contribution (DC) pensions are tested against the LTA based on the fund value. There were, and are, protections that can help you avoid a tax charge by giving you a higher LTA. We can discuss whether this applies to your situation.

What does your current and forecasted wealth look like?

As you get closer to retirement, it is important to assess your current and forecasted wealth, along with your income and expenditure, to create a picture of your finances for both now and in the future.

Lifetime cash flow modelling will help ensure you don’t run out of money – or die with too much – by showing whether your current investment approach is either excessively risky or unduly cautious. Retirement cash flow modelling can help to alleviate your concerns.

Building your individual retirement cash flow plan involves assessing your current and forecasted wealth, along with your income and expenditure, using assumed rates of investment growth, inflation and interest rates, to build a picture of your finances both now and in the future. If you have accumulated wealth, retirement cash flow modelling will help you manage your position and make sensible decisions over the years. However, cash flow planning is arguably even more beneficial if you have longer-term personal or business objectives, as you can see how much you need to save and the returns you need to meet those defined objectives.

Time to look at your options available when accessing your pension?

Once you reach age 55, you can access your defined contribution (DC) pension pot. You can take some or all of it, to use as you need, or leave it so that it has the potential to continue to grow. It’s up to you how you take the benefits from your DC pension pot. You can take your benefits in a number of different ways. You can choose to buy a guaranteed income for life (an annuity). You can take some, or all, of your pension pot as a cash lump sum, or you can leave it invested. However you decide to take your benefits, you’ll normally be able to take 25% of your pension pot tax-free. The rest will be subject to Income Tax.

It’s good to have choices when it comes to pensions and your retirement, but it’s also important to understand all your options and any impact your decision may have on your future security. How long your pension pot lasts will depend on the choices you make. We can help by discussing the options available to access your pension.

Annuities

If you buy an annuity this will provide a guaranteed income for the rest of your life. With this option, the provider agrees to pay you an agreed regular sum until you die. With an annuity, you may receive more or less money than you put in depending on how long you live after your annuity has started.

Flexi-access drawdown

By opting for flexi-access drawdown, you can leave your pension pot invested so that it has the potential to grow, or take lump sums or a regular income from it. Your pension pot will last until you’ve taken all your money out. The level of income you take and any investment growth will be key factors as to how long your pension pot will last.

Take some or all of it in cash

If you take some or all of your pension pot as a cash lump sum, it’s up to you how long it lasts. Once you receive your money after tax, you’re completely responsible for it and can use it as you require – although remember that although 25% of the amount you take is tax-free, you’ll pay Income Tax on the rest.

Leave it all for now – defer your pension

You could decide not to take your pension at your selected retirement date and leave it invested until you’re ready to take your benefits. This means your pension pot would have the potential to grow, although this is not guaranteed. It’s important to ensure you don’t lose any guarantees which only apply at your retirement date if you decide to leave your pension pot.

Would you like us to carry out a retirement plan review with you?

Even if retirement isn’t far away, there are ways to increase your retirement income. This applies both to your State Pension entitlement as well as to any personal or workplace pension pots you have. To find out what you can do, please contact us for more information.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future. You should seek advice to understand your options at retirement.

 

Market Update Monday 21st November 2022

Major indices give back previous weeks gains

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Most major equity indices gave back some of the previous week’s strong gains and closed slightly lower. Growth stocks lagged value-oriented shares, which were supported by gains in the consumer staples sector. The energy sector underperformed, however, as European oil and natural gas inventories reached near-peak levels. Dispelled reports of a Russian missile strike on Polish territory sparked a brief sell-off on Tuesday.

U.S. stock indexes rallied on Tuesday after a report showed the prices that suppliers charge goods producers rose at a slower pace in October than economists had forecast. The government’s Producer Price Index was the second recent piece of positive news on inflation, coming after the previous week’s better-than-expected report on the Consumer Price Index.

Counteracting this news and on the heels of a flat result the previous month, U.S. retail sales picked up in October, rising a seasonally adjusted 1.3% from September. That’s the strongest monthly retail gain since February 2022, despite negative factors such as inflation and rising interest rates.

UK stocks rise despite tax increase announcement

US equities fell 0.6% over the week, with US technology stocks falling by -1.5%. European equities outperformed their US equivalents posting a gain of 0.7% whilst UK stocks rose by 0.92%. UK finance minister Jeremy Hunt unveiled tax increases, spending cuts, and new fiscal rules in his Autumn Statement, with an eye toward repairing the public finances and restoring Britain’s credibility in international markets. Chinese markets showed further optimism after positive talks between US and Chinese leaders along with hopes of a post Covid recovery, with a weekly return of 4.2%, with the broader EM market +0.8% for the week.

US Yield Curve inverts further

The U.S. Treasury yield curve inverted further during the week, driving the inversion in the two-year/10-year curve segment—historically, a typical but not conclusive indicator of a coming recession—to its deepest level in over 40 years. Short-term U.S. Treasuries repriced to higher yields, particularly after suggestions that the Fed’s terminal policy rate should reach a minimum level of 5% and may need to go as high as 7% to achieve the central bank’s inflation objectives. The US 10-year treasury yield ended the week at 3.83% whilst the 2 year equivalent closed at 4.5%

Oil falls as inventories reach peak levels

Oil fell 9.8% for the week as European inventories reached peak levels and investors fear a supply glut in the face of a slower period of economic growth. WTI crude oil ending the week at $80.24 per barrel.

Making inheritance gifts from surplus income

Are you making use of this useful and much under-utilised exemption?

If you want to make inheritance gifts from surplus or excess income, there is a useful and much under-utilised exemption that allows gifts over and above the value of £3,000 per annum to be made without these gifts forming part of your estate if you die within seven years of making them.

The exemption comes under the heading of ‘Normal expenditure out of surplus income’. It is a particularly valuable way of gifting part of your estate to future generations on a regular basis.
If you want to make inheritance gifts from surplus or excess income, you need to show that you intend to make regular gifts that will not affect your normal standard of living, and that will come from income rather than capital.

This form of giving is most effective for those with higher incomes relative to their cost of living, who are either looking to clear their estate or just make gifts to loved ones – especially in order to distinguish these gifts from lifetime gifts of capital that have already been made or are being contemplated.

So, what are the requirements?

  1. The gift must form part of your normal expenditure – this can mean either a pattern of regular gifts or the intention to make regular gifts. You therefore need to record when you are making a gift out of income, by writing a letter for instance.
  2. The gift is made out of income.
  3. You are left with enough income to maintain your normal standard of living.

In order to assess whether you have sufficient income to utilise this exemption and to satisfy conditions 2 and 3, you will need to:

  • Consider how much net income you receive (for example, from employment, pensions, dividends, interest, rent) after tax.
  • Review what your normal expenditure amounts to – there is no actual legal definition of what ‘normal expenditure’ amounts to but it is based on an individual’s particular circumstances. This may, of course, fluctuate from year to year.

Conditions that must be met

It is important to consider the conditions that must be met for gifts to qualify. The conditions of ‘surplus’ and ‘normality’ are qualitative and, without methodical planning, can leave room for doubt about the tax effects. It’s therefore important to seek professional financial advice in advance to identify any ambiguity. Inadvertently making a gift of capital could be very costly and later give rise to a 40% Inheritance Tax charge on those funds should you die within seven years.

Carrying forward your income

If appropriate, you could complete this process each tax year to review how much surplus income you have for that year. You can then increase or decrease the amount you gift accordingly. There are no hard and fast rules as to when income no longer retains its status as income. However, HM Revenue & Customs tends to take the approach of being able to carry forward income for a period of two years. It’s important to keep financial records that allow you to calculate and offset expenditure against income. This will determine the amount available for gifting. Tracking the opening and closing balances on monthly bank statements is the usual starting point.

Continuing to make regular payments

It’s also helpful to record a Memorandum of Intent, declaring your future intention to make regular gifts of your excess income, which can be used to anticipate a challenge to their nature. The Inheritance Tax Form 403 provides a useful recordkeeping tool. Your executors will need to claim the exemption on your death, and therefore it is important to maintain thorough record keeping.

In certain situations, it may be possible that a single gift could qualify so long as it can be proved upon death that there was an intention to continue with the payments. Such intention could be proved by the donor providing a signed letter to the recipient confirming their intention to continue to make regular payments.

wishing to retain control of your capital

This is a particularly effective means of tax planning if an individual is not dependent upon such income to maintain their current standard of living but wishes to retain control of their capital. For example, a parent could pay the premiums on a life policy for their child, make payments into trust for the benefit of their children, or pay their children’s school or university fees. The gift can be made out of general income or it could be made out of a nominated source such as property rental or specific investment income.

Is your wealth protected for you and your family?

Estate planning is essential to make sure your wealth is protected for you and your family. By structuring your assets in a taxefficient way, you can make sure everyone is provided for in the future. To discuss your options or any estate planning concerns you may have, please contact us.

This information is based on our current understanding of legislation. Legislation and tax treatment can change in the future. The financial conduct authority does not regulate inheritance tax planning and trusts.

 

Market Update Monday 14th November 2022

US equities record their strongest day in over two years as inflation softens

A softening in the latest inflation data out of the US sent markets sharply up this week, with US equities recording their strongest day in over two years on Thursday. US inflation for the year to October came in at 7.7%, sharply down on the previous reading of 8.2% in September. Even once food and energy are excluded, the inflation numbers eased, coming in at 6.3%, down from 6.6%. Market expectations for the next US rate hike have come down to a 0.5% increase, with the peak in rates now priced in at 4.9%.

Global equity markets rally on the back of softer US inflation data

As of 12pm on Friday, London time, US equities rose 4.9% over the week, with US technology stocks rising by 6.1%. However, for overseas investors, equity gains in US stocks were dampened by a sharp sell-off in the dollar, which fell by 3.2% versus the Euro and Sterling. European equities increased by 3.8%, helped by better-than-expected German industrial production data released on Monday, which rose by 0.6% for the month of September, against a decline of 0.8% in the previous month. UK stocks rose by 1.3%, held back by news that UK GDP fell by 0.6% in September, a larger fall than forecast. However, within the more beaten-up area of UK small and mid-cap stocks, equities rose a whopping 8.2% over the week, responding to the easing in US inflation. The Japanese market increased by 3.3% and Australian stocks rose by 3.9%. Emerging markets rose by 5.2%, boosted by news that China shortened Covid-19 quarantine requirements for close contacts and international travellers.

Bond markets join in the rally

US Treasuries rallied on the release of the inflation data with yields, which move inversely to price, falling to 3.8% on the 10-year. German bunds and UK gilts followed suit, now yielding 2.11% and 3.36% respectively.

Gold also rises as US interest rate expectations rollover

Gold jumped by 5.0%, supported by lower expectations of future US interest rate rises, now trading at $1,761 an ounce. Although crude oil ended the week lower, with Brent crude falling by 2.1% to $96.5 a barrel, this masked a strong rally at the end of the week, having fallen under $92 on Thursday. European natural gas resumed its very helpful downward spiral this week, falling by almost 11% to €101.5 a megawatt hour, due to unseasonally warm weather.

Republican ‘red wave’ fails to materialise in the US mid-term elections

In the US mid-term elections, the ‘red wave’ in favour of the Republican party failed to materialise. At the moment the Republicans look to have taken the lower house of Representatives, whilst the upper house of the Senate remains too close to call. Historically, markets have responded well to a divided Congress as it limits the amount of disruptive new regulations or tax increases that can be passed.

Beat the scammers

Don’t become a victim of illegal pension activities

Your pension is one of your most valuable assets, and for many it offers financial security throughout retirement and the rest of their lives. But, like anything valuable, your pension can become the target for illegal activities, scams or inappropriate and high-risk investments.

Fraudsters promise high returns and low risk, but in reality, pension savers who are scammed can be left with nothing. When savers realise they’ve been scammed, it can be devastating – many lose their life savings. Once the money is gone, it’s almost impossible to get it back.

How pension scams work

Anyone can be the victim of a pension scam, no matter how savvy they think they are. It’s important that everyone can spot the warning signs. Scammers try to persuade pension savers to transfer their entire pension savings, or to release funds from it, by making attractive-sounding promises they have no intention of keeping.

The pension money is often invested in unusual, high-risk investments like:

  • Overseas property and hotels
  • Renewable energy bonds
  • Forestry
  • Parking
  • Storage units
    Or it can be simply stolen outright.

Warning signs of a pension scam

Scammers often cold call people via phone, email or text – this is illegal, and a likely sign of a scam. They often advertise online and can have websites that look official or government-backed.

Other common signs of pension scams:

  • Being approached out of the blue: by text, phone call, email or at your front door
  • Phrases used like ‘free pension review’, ‘pension liberation‘, ‘loan’, ‘legal loopholes’, ‘savings advance‘, ‘one-off investment’, ‘cashback‘, ‘government initiatives’
  • Recommendations of transferring your money into a single overseas investment, with returns of 8% or higher
  • Guarantees they can get better returns on pension savings
  • Help to release cash from a pension before the age of 55, with no mention of the HM Revenue & Customs (HMRC) tax bill that can arise
  • High-pressure sales tactics-time limited offers to get the best deal; using couriers to send documents, who wait until they’re signed
  • Unusual high-risk investments, which tend to be overseas, unregulated, with no consumer protections
  • Complicated investment structures
  • Long-term pension investments – which often mean people who transfer in do not realise something is wrong for a number of years
  • Claims that they are from a legitimate organisation like ours, the Pension Service, Pension Wise
  • Visits from a courier or personal representative to pressure you to sign paperwork and speed up your transfer
  • There may be an authentic-looking website, but these can be cloned from legitimate organisations
  • There will be little or nothing in the way of contact names, addresses or phone numbers

Scams can take many forms

Many scammers persuade savers to transfer their money into single member occupational schemes, or other occupational pension schemes. It’s good to remember that pension scams can take many forms and usually appear to most to be a legitimate investment opportunity.
What to do if you think you’ve been or are being scammed, If you think you might have already been targeted and you’ve agreed to transfer your pension, you should:

  1. Contact your pension provider immediately – they may be able to stop the transfer if it has not already gone through.
  2. Contact Action Fraud on 0300 123 2040 and report the scam.

Market Update Monday 7th November 2022

US Federal Reserve signals shallower, but higher interest rates

The US Federal Reserve (Fed) raised rates by 0.75% for the fourth time in a row, whilst signalling that the magnitude of future rate hikes may moderate, acknowledging the delayed impact of monetary policy on economic activity and inflation. For a brief moment US equities rallied, before Jerome Powell, the Fed chair, poured cold water on the idea that peak rates were near, as he said he expected rates to peak at a higher level than previously thought. US equities, still trading at a sizeable premium versus other internationally traded equity markets, fell sharply, with technology stocks once again bearing the brunt of the pain. Despite the dollar strengthening once again, excluding the US, most other equity markets made gains. Chinese equities were particularly strong, on unsubstantiated rumours that a “reopening committee” had been established to assess different reopening plans for next year.

US equities tumble whilst gains made elsewhere

As of 12pm on Friday, London time, US equities were down 4.6% over the week, whilst the US technology sector had fallen 6.8%. European stocks, however, rose 1.2%, with UK equities rising by 3.5%. This followed the Bank of England’s governor, Andrew Bailey, heavily guiding markets down on future rate rises, having put rates up by 0.75% this week, taking the base rate to 3.0%. Japanese stocks were up by 0.9%, whilst the Australian market increased by 1.6%. Emerging markets climbed up by 1.8%, with Latin American markets increasing by 4.5%, and onshore and offshore Chinese equities rising by 5.3% and 8.7% respectively.

US bond market points further towards recession

The yield on rate-sensitive two-year US Treasury bonds, which move inversely to price, rose to its highest level since 2007, now trading at 4.75%. This is sharply higher than the 10-year bond which is trading at 4.16%, leaving the yield curve inverted, signalling an impending recession. The yield on 10-year German Bunds rose slightly over the week, now trading at 2.29%, whilst UK gilt yields rose to 3.56%.

European natural gas prices turn higher once again

Gold traded up to $1,653 an ounce, an increase of 0.5% over the week. Whilst Brent crude oil rose by 2.2%, now trading at $97.9 a barrel, and US WTI (West Texas Intermediate) increased by 4.2%, priced at $91.6. European natural gas, having fallen sharply over the last few months, rose by 10% over the week, taking the price to €121 Megawatt Hour. This price is likely to be very volatile in the coming months, exacerbated by the limited gas storage capacity in Europe and the prevailing weather impacting winter demand.

Sterling takes the pain as the Bank of England forecasts a year-long recession

The governor of the Bank of England forecast a year-long recession in the UK this week, as consumers battle a cost-of-living crisis against the backdrop of sharply higher energy prices as a direct result of the Russia-Ukraine war. What was perhaps striking, was how well the stock market performed against this rhetoric, a result of just how cheap UK equities have become, and expectations that the recession will be shallow. However, the pain was taken in the currency, as sterling fell against both the dollar and the euro, now trading at $1.12 and €1.14 respectively.

Fed looks for evidence to justify a hiking slowdown

The latest jobs report from the US Bureau of Labor Statistics is due out today, with forecasts of 200,000 new jobs having been created in October, down from 263,000 in September and 315,000 in August. Whilst unemployment is forecast to rise to 3.6% and wages to have risen by 0.3%, the same level as they rose in September. The Fed will be looking for some moderation in employment data before slowing down the tightening cycle, otherwise, the risk for markets has to be for further 0.75% rate hikes.

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