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28 Nov 2023 | 5 minutes to read

A good week for

  • Gold, which advanced 1.0%
  • Sterling, which strengthened +1.1% against the US dollar, +0.9% against the euro, and +1.0% against the yen

A bad week 

  • UK government bonds, which declined -1.7%
  • Equities broadly retreated, with US markets -0.3%, Japan -1.4% and emerging markets -0.9%

Autumn statement

Last week, Chancellor of the Exchequer, Jeremy Hunt, announced 110 policies in the Autumn Statement which he claimed would unleash entrepreneurialism, improve productivity and make work pay. Headline policies included a reduction in the rate of National Insurance from 12% to 10% from January 2024; making permanent ‘full expensing’, permitting businesses to offset some capital-expenditure against corporation tax; and pushing ahead with pension industry reforms. Notable omissions were changes to income and inheritance taxes and a so-called British ISA. The Office for Budget Responsibility (OBR) was less upbeat than Hunt, lowering March’s GDP forecasts from 1.8% to 0.7% for 2024, and from 2.5% to 1.4% for 2025 - with the UK not recovering to pre-pandemic levels until 2027-2028. The OBR now expects inflation to fall slightly less quickly to 2.8% by the end of 2024, before moving towards the Bank of England’s optimal target of around 2% in 2025. Markets moved little on the news. More commentary is available here.

US Fed minutes

The US Federal Reserve (Fed) officials agreed at last week’s meeting that monetary policy should remain restrictive for some time in an effort to continue cooling inflation. Policymakers held their benchmark lending rate at a range of 5.25 - 5.5% last month and signalled that rates would stay higher for longer than previously expected, while members of the board noted that further tightening of monetary policy would be appropriate if progress on lowering inflation was insufficient. US equity markets closed lower following the release of the minutes, while the dollar index edged higher on a trade weighted basis. US Treasury yields slipped. Members of the board generally noted that it was crucial “to balance the risk of overtightening against the risk of insufficient tightening”.

Purchasing manager indices

Last week’s raft of Purchasing Manager Indices (PMI) data from S&P Global continued trends from October. In the UK, the services sector continued to do the heavy lifting for the economy, returning to expansionary territory (reading above 50) with a reading of 50.5, a smidge ahead of expectations. Manufacturing sectors are still contractionary however (below 50), but sustained their recovery from the August low of 43.0 with a reading of 46.7. The Growth from Knowledge (GfK) Consumer Confidence indicator supported the improved PMI data, with a reading of -24 (against expectations of -28) following the previous month’s reading of -30. Europe showed little change for a fourth month in a row, with both the manufacturing and services sectors in contractionary territory. Services PMIs continue to be the stronger of the two at 48.1, with manufacturing coming in at 43.8. In the US, readings underlined a more robust economy with services continuing to expand at 50.8, while manufacturing just missed at 49.4. However, composite data across the economy was unchanged at 50.7.


Reports that Saudi Arabia last week pulled a scheduled meeting of The Organisation of Petroleum Exporting Countries and affiliates (OPEC+) briefly caused the price of Brent Crude to tumble around -5% before recovering. It was thought the Saudis are dissatisfied with members’ production levels but the official OPEC statement gave no reason. The meeting will now coincide with the first day of the Conference of the Parties climate summit (COP28) in the UAE. The UAE is a chair of COP28 and a member of OPEC. The transition to decarbonisation is profoundly complex for oil-rich exporting states which will need to restructure their economies in the decades ahead. Allegations in leaked documents that the UAE planned to leverage is status as COP Chair to agree oil and gas deals shows just how uncomfortable a juxtaposition net zero and oil production may be.

Argentina election

On 19 November, Javier Milei took the presidential election with 56% of the votes. A self-described “anarcho-capitalist” defeated the current Economy Minister Sergio Massa. Milei came out on top in 21 of the 24 provinces, making him the best-elected president since 1983. He has called for the abolition of the central bank, replacing the peso with the US dollar, and reducing public spending by 15% of GDP. In addition to what he called his “chainsaw plan”, he also wants to roll back on certain social rights such as abortion. The uncertainty surrounding the new president is heightened by the fact that he has no majority in Congress and no provincial governor or mayor belongs to his coalition. He will have to forge alliances in the Senate and the Chamber of Deputies.


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