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Article | 29 October 2019 | Investments
The European Central Bank stepped in to support the economy through lower interest rates and further bond purchases, while the US Federal Reserve also cut rates. This support then dampened the spirits of bond investors, and global bond markets ended the month a little weaker. Returns for UK investors were worsened by a stronger pound, which led the value of non-UK bonds to decline in sterling terms.
In contrast, shares (‘equities’) were fairly strong, responding positively to the central bank stimulus. In our view, the weakening economic picture and the abundance of risks, including the US-China trade war, Brexit and geopolitics (such as the drone strike on Saudi oil facilities), lead us to maintain our underweight exposure to equities.