Monthly Review - July 2022
Not unexpectedly, following the worst first half of the year for the S&P 500, and with investor sentiment reaching its lowest levels since 2008 (see chart below), the second half of 2022 has started with a sharp recovery in the prices of most risk assets.
As we have previously noted in our commentaries, investors are conscious of the fact that central banks, whilst anxious to look as if they are doing something about inflation, are actually very restricted as to the extent of monetary tightening that is possible without breaking something. This being the case, sentiment is now moving closer to our view that the Federal Reserve is likely to slow and even stop raising rates later this year, and might even pivot to cutting rates in 2023. This prospect, together with extreme bearish sentiment, resulted in renewed optimism for long duration risk assets, or at least some significant short covering. This helps explain the sharp rally, especially in growth equities, over the past month.
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LeifBridge is a trading name of Shard Capital Partners LLP. Shard Capital Partners LLP is a limited liability partnership, registered in England with registration number OC360394. Shard Capital Partners LLP Registered office:36-38 Cornhill, London, EC3V 3NG.. Shard Capital Partners LLP is authorised and regulated by the Financial Conduct Authority in the United Kingdom, reference number 538762.
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