France and tech are feeling the bite of bonds

Markets viewed the blue wave in the US midterms as a constraint on the continued growth in US tech spending. On this latest episode of the Markets Explained podcast, Hugh and Karen explain why they don’t agree with this interpretation, and why the latest US inflation release is the critical item to watch out for in the week ahead.

The US midterm elections loom this week, but with the polls suggesting at least some loss of control for the incumbent government, the outcome may not be big news for markets. The latest economic data is therefore likely to be more instructive, and with US payrolls on the docket, there is plenty to discuss.

In this week’s podcast, Hugh is joined by special guest Jon Ingram, Head of the Unconstrained team within the International Equity Group. With mega-cap tech earnings having been met with disappointment by the market so far, Hugh and Jon unpack what investors most want to hear from company management on AI capex, as well as how France’s political volatility is impacting European stocks.

The news flow this week, whether from highly indebted data centre builders or the French riots, is a reminder that higher bond yields will always create stress somewhere.

In this episode, Hugh and Karen dive into the upcoming earnings season and highlight the questions on their minds in the tech space and beyond.

The US labour market could have added fuel to the bond market fire last week, but in fact it still looks broadly stuck in a ‘no hire, no fire’ pattern. With more and more oil leaving the Strait of Hormuz, one might also have expected the bond market to calm down. Hugh and Karen share their initial thoughts on what’s still worrying the bond market.     

On this week’s podcast, Hugh and Karen discuss the latest developments in the oil markets, including talk of diesel export curbs. They also highlight why the rise in bond yields has more to do with the resilience of economic growth than with inflation, and why equities are, so far, unfazed.

In this podcast, Hugh and Karen pick up on the latest political headlines from both Germany and the Middle East. They remind us why the economic implications are often far more sanguine than the political headlines would suggest, and why the bond market will act as the disciplining force, serving as judge, jury and sometimes executioner for bad politics and bad policies. The equity market, meanwhile, continues to ride the wave of economic resilience.

Lots to discuss again this week, with conflict raging on in the Middle East, central banks under pressure to raise rates and bond markets still unsettled.

In this week's podcast, Karen and Hugh discuss the latest flurry of economic news which suggests the global economy is weathering the barrage of shocks thrown at it. They also share their immediate reaction to the new UK Chancellor of the Exchequer’s first speech and ask: having talked the talk, can the Chancellor turn those words into effective policy action?