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The Cambridge Weekly – 4th December 2023


4th December 2023


Perspective News, The Cambridge Weekly

The Cambridge Weekly – 4th December 2023

Price shock reversal

November brought investors the opposite of October and turned most portfolio returns into positive mid single-digit numbers for the year. As we have written here over the past weeks, the distinct turn in sentiment that drove markets in November was, once again, mostly about central banks and the likely path of interest rates. After October was about ‘higher for longer’, early November transitioned to ‘no more rate rises and the next move is down’, when inflation came down far more than most had expected. Last week, we heard discussions of Eurozone rate cuts in time for Easter.

UK inflation exceptionalism

The Bank of England (BoE) continues its expectation management programme. Since the previous Friday, two top officials and one external member of the Monetary Policy Committee (MPC) warned us not to not get excited about looser monetary policy, sticking firmly to the ‘higher for longer’ mantra on interest rates.

Wind of change for renewables?

It has been a miserable year for investors in the renewable energy sector. Tighter oil supplies have pushed up the price of fossil fuels, increasing the short-term returns on oil and gas stocks. When you add in the tightest global monetary conditions in decades – which have hammered valuations for all long-duration assets – it is a recipe for disaster, since clean energy stocks are seen as longer-term investments. The S&P
Global Clean Energy Index has fallen over 30% year-to-date.

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