Mountstone Partners create and manage bespoke investment portfolios for wealthy families, charities and trusts. CEO James Keen publishes a monthly investment update for their clients. Here is James Keen’s March Newsletter – please contact him if you have any queries about the markets or indeed your portfolio.
The market thinks there is a 90% chance that the Federal reserve will increase interest rates after they conclude today’s meeting (14th March) and if they pull the trigger this will be the third rise since US rates bottomed on December 16th 2008. With the economy in rude health, we believe that this could finally herald the turning of the interest rate cycle in the US.
Whilst we won’t be back at the giddy heights of 6% bank rates in the US any time soon, a shift up to 2-3% represents a major risk to investors in ‘low risk’ government/corporate bonds. We believe that investors should be fearful of such a move and that acting now to reduce exposure to interest-rate sensitive bonds is sensible.
We’ve summarised our thoughts in this short piece and as always do let me know if you have any comments or questions.