S&W The Pulse

As the US 10 year treasury yield tips over the symbolic 3% mark, it may mark the end of the ‘TINA’ trade (‘There Is No Alternative’). Investors that have gravitated to stock markets as bond yields dipped now have a broader range of options, particularly as inflation appears to be nearing its peak.

After a brief recovery, markets weakened in April, as inflationary pressures persisted and a resolution in Ukraine appeared remote. Economic data has weakened, but is still relatively resilient, which has provided some support to stock markets, even as interest rates rise.

In this episode we discuss why a strong tax risk management framework is critical for businesses as this should lead to a good relationship with HMRC and fewer HMRC enquiries.

Even before the Ukraine crisis emerged, markets were looking fragile. A shift in monetary policy direction from central banks in response to mounting inflationary pressures had pushed bond yields higher. This prompted a significant sector rotation in markets – away from US, growth and technology towards less rate-sensitive ‘old world’ sectors.

In this episode with Ami Jack, Head of National Tax; Luke Brooks, Managing Partner in the Financial Planning Team and Adam West Private Client Tax partner, discuss all the things you can do ahead of year end to put you in a better position.

A combination of tightening monetary policy, geopolitical tensions and rising inflation has seen markets wobble at the start of 2022. Megacap technology names have been particularly hard hit. In contrast, the UK has benefited from a stronger economic outlook and investors’ rotation into more ‘value’-focused sectors.

Last year saw a combination of vaccines and stimulus deliver global economic growth of 5.9%, but it came with an inflationary sting. This was good news for equities but bad news for bonds. It’s a similar picture for 2022, but with more potential volatility.

HMRC has estimated the amount lost due to fraudulent or erroneous CJRS claims is £5.3bn, or close to 9%. Attention has turned to recouping this.

As the global economy recovers, and inflationary pressures mount, central banks are increasingly changing direction on monetary policy. As long as rises are gradual and well-flagged, it is unlikely to disrupt economic recovery.

Soaring global energy prices have contributed to inflationary pressures, while economic growth has lost momentum. This has created fears of stagflation. This would be tough for stock markets, but is still only an outside possibility.