Nice to CPTPP you

Weekly update
  • Weekly market update
  • 5 minute read

A good week for

  • European equities continued to rally in sterling terms, leading equities higher
  • Oil continued to rise, gaining 6% in US dollar terms

A bad week for

  • Bonds declined, led lower by UK gilts
  • Gold slipped c. -7% in US dollar terms

UK trade

The UK has announced it will join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The trade bloc was formed in 2018, with the UK becoming its first new member. Members include Australia, Canada, Japan, New Zealand, Singapore, Vietnam, Mexico, Chile, Peru and Brunei. The agreement covers around 15% of global trade, but is currently expected to have only a marginal benefit to the UK economy, to the tune of around 0.1% over the long term. This is partly due to the fact that the UK already has existing bilateral trade agreements with many member states. However, the benefit could increase if membership expands to the likes of Thailand and South Korea in the future, while it is hoped that the US will also one day join the agreement. This could allow the UK to reach a trade agreement with the US without having to choose between abiding by European food quality standards or US standards.

Artificial intelligence

Developments in artificial intelligence (AI) have gained traction in recent months, but now some leaders in the tech industry are calling for a pause. Tesla CEO Elon Musk penned an open letter calling for a six-month pause to further development of AI systems beyond the latest iteration of AI chatbot, ChatGPT (GPT-4). Musk is himself a co-founder of the firm behind ChatGPT, OpenAI. The letter was co-signed by more than 1,800 signatories, including tech leaders, engineers and cognitive scientists. The letter warned that such AI systems with “human-competitive intelligence” pose profound risks to humanity and urged AI labs and experts to “use this pause to jointly develop and implement a set of shared safety protocols for advanced AI design and development that are rigorously audited and overseen by independent outside experts.” Alongside safety concerns, the development of AI poses a range of legal challenges, especially regarding intellectual property rights, which could pose new challenges for businesses.

US monetary policy

With US inflation still high, speculation continues that the US Federal Reserve (Fed) may change its inflation target. Currently, the Fed targets inflation of 2%, which members of the Federal Open Market Committee (FOMC) judge is “most consistent with the Fed’s mandate for maximum employment and price stability. While inflation is expected to fall significantly this year, it is expected to remain above 2% well into 2024. This has led some to speculate that, rather than acting to bring down inflation and risking an economic slowdown in the process, the Fed may instead consider relaxing the inflation target. However, relaxing the target at such a time could work against the Fed, by shifting one of the anchors for inflation expectations, the 2% target itself.

Eurozone inflation

Eurozone inflation cooled sharply in March, slowing from 8.5% in February to 6.9%. This larger-than-expected fall was due to the fall in energy prices – energy inflation went from +13.7% to -0.9%, as the sharp increases seen at the start of 2022 move out of the annual calculations. In contrast, food inflation remained strong, at over 15%. While headline inflation slowed rapidly, core inflation, which excludes volatile items, accelerated modestly to 5.7% from 5.6% in February. While food and energy prices are expected to cool further, and Eurozone inflation is expected to continue to decline, the European Central Bank (ECB) is expected to continue tightening monetary policy. This reflects better GDP forecasts, now energy prices are less of a hindrance for growth, and continued strong core inflation and labour market tightness.


Japan has announced curbs on the export of semiconductor manufacturing equipment. This move aligns Japan with the US’s efforts to limit China’s access to advanced chips and the ability to manufacture them. In October, the US imposed restrictions on companies and personnel, limiting China’s access to chips. Japan and the Netherlands, two key countries in the chip-making supply chain, also agreed to support the US’s efforts in November. However, Japan is still trying to maintain a trade relationship with China, its biggest trading partner.



There will be no newsletter next week over the Easter Bank Holiday. We wish you a happy Easter.


Important information
The information contained in this article is believed to be correct but cannot be guaranteed. Past performance is not a reliable indicator of future results. The value of investments and the income from them may fall as well as rise and is not guaranteed. An investor may not get back the original amount invested. Opinions constitute our judgment as at the date shown and are subject to change without notice. This article is not intended as an offer or solicitation to buy or sell securities, nor does it constitute a personal recommendation. Where links to third party websites are provided, Close Brothers Asset Management accepts no responsibility for the content of such websites nor the services, products or items offered through such websites.


Before you invest, make sure you feel comfortable with the level of risk you take. Investments aim to grow your money, but they might lose it too.