• Last week’s US Federal Reserve Fed meeting saw Powell signal that tapering of bond purchases is likely to be announced around November, with net purchases set to cease in the middle of 2022. A first interest rate hike in the US in the fourth quarter of 2022 is now in line with half of the Fed participants. US treasury bonds were initially unmoved but increased supply and a likely rate hike by the Bank of England in the 4th quarter led government bond yields higher.

• Economic data releases confirmed an expanding economy but decelerating from the prior high levels. Preliminary purchasing managers indices, a business sentiment survey, in the US showed continuing strong growth, especially in manufacturing, but modestly weaker than last month’s level. In the Euro area, both manufacturing and services preliminary purchasing managers indices are signalling strong growth, but noticeably lower than last month.

• Our asset allocation view remains overweight equity – supported by reasonable forward valuations and positive earnings growth and underweight fixed income – focusing on shorter maturities and corporate bond exposures.