The peculiar relationship between Oasis and periods of extreme market volatility The peculiar relationship between Oasis and periods of extreme market volatility

Central banks have traditionally relied on interest rates as a primary tool to influence economic activity, raising rates to cool down an overheating economy, and cutting rates to stimulate growth. Historically, these mechanisms have worked fairly well; however, the recent cycle has proven to be different. Despite a series of aggressive rate hikes, the expected economic slowdown has been surprisingly muted, suggesting that economies are now less sensitive to interest rates.

Taylor Swift’s record-breaking Eras Tour has become a global economic juggernaut, redefining the economic impact of entertainment on an international scale. As she concluded her eighth electrifying night at Wembley Stadium (thrilled to say I was there for the eighth night; Jim was there on Friday – yes, Jim Leaviss is a Swiftie), her influence has become undeniable. Extending beyond the realm of pop culture, Swift’s tour is generating billions in GDP, potentially influencing monetary policy decisions and presenting a unique challenge to policymakers.

The economic cycle is at an interesting inflection point where the effects of higher interest rates are becoming evident in numerous ways, be it a slowdown in the labour market, falling inflation, or wavering consumer and business confidence. Whilst a lower rate of inflation is welcomed, the important question remains: have interest rates been too high for too long, and has this caused irreparable damage to the economy in its current cycle?

Those young enough to still enjoy the music of Charli XCX, or parents with children tuned in to the latest trends, may be familiar with her latest work, Brat. This album has not only captivated young audiences, but has also sparked a cultural phenomenon dubbed ‘Brat Summer’.

Notwithstanding the recent bout of volatility, emerging market (EM) corporate credit has performed well this year, posting returns of 5.6% to July 2024 at the index level. There are several reasons for this, including the low leverage in this space, greater state participation in (and therefore protection of) the corporate sector than in developed markets (DM), and the relatively high-quality and short-duration nature of the universe.

The Wall Street Journal published a piece on the inverted yield curve as a recession indicator a few weeks back, mulling over why this reliable indicator seemed to be broken. The piece is very good and is worth the read, not least because they’ve blown their web budget on dynamic graphs. To solve the mystery, it’s helpful to revisit the life and works of the Canadian asset allocation guru, Campbell Harvey.

As you may have already heard, I’m going to be leaving M&G later this year, after over 27 years here, most recently as the Chief Investment Officer for Fixed Income.  I’m off to do a Master’s in the History of Art, and so I’ll be back in full-time education, studying modernism in Germany between the two World Wars.