August was a month of significant moves in global bond markets, as rising inflation concerns, heavy government borrowing and increased private-sector issuance pushed long-dated yields higher. Yet equity markets remained resilient, with the MSCI World Index gaining 2.6% and US markets supported by a strong earnings season. Locally, the FTSE JSE All Share Index gained 4.3%, led by a sharp rally in gold and platinum group metals.
In this month’s Prosperity, we look at what is driving these developments across global markets, what rising sovereign debt means for investors and why South Africa is in a somewhat different position.
These themes also feature in this month’s Markets & Meaning, where Sean Ashton looks beyond the latest headlines to consider what rising US bond yields, fiscal deficits and the continued strength of the AI investment cycle tell us about where we are in the market cycle. He explores the renewed interest in gold, the relationship between government deficits and corporate profits and what NVIDIA’s latest results reveal about the durability of the AI investment cycle.
Sean’s conclusion is that while we are clearly not early cycle, he does not believe we are at the top either. With earnings continuing to surprise and valuations having already seen some compression, he believes this could still be an earnings-led bull market with legs.