History shows us that financial markets; not just Government Bonds, but also credit and equity, can suffer in the early stages of a tightening cycle. However history also shows us that pro-risk portfolios can make progress in this environment as and when investors realise that central banks are tightening policy to prolong the business cycle and ensure that inflation remains close to the target rate.


We continue to live in a yield starved environment and with evidence of returning inflation returning to the system, it is as important as ever that investors hunt for a positive real return


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In the developed world a number of companies in the market today seem to have stretched valuations with the hunt for "quality" becoming a little irrational as investors are pushed out of bonds and into equity in the pirsuit of yield. The lack of wage inflation continues to perplex commentators as it is usually present at this stage in the cycle. The wait continues but green shoots are starting to appear.