Happy new year!
- In 2016 we had 4 big shocks to the markets:
- Fear of a Chinese collapse
- Energy price collapse
- Trump election victory
- The markets recovered from all of those and ended the year on their highs.
- The likelihood is that we will see a continuation of 2016 trends in 2017 at least initially:
- Stronger growth, especially in the US. We have already had good data from Japan, China and the UK.
- Higher US rates, as confirmed by the recent Federal Reserve minutes (and lower bond prices)
- A stronger US dollar.
- Commodity markets supported by greater demand but held back by supply and a stronger US dollar. So, “range-bound”.
- Strong equity markets – no one is going to allocate money to bonds in this environment.
Happy investing in 2017!