David Bulteel

“Since November, expectations for economic growth have stabilised, as the damage from the housing fallout in the US has so far been contained. Fears of growth sliding away have abated, deferring hopes of rate cuts. Further falls in oil prices late last year will lead to lower inflation rates, while cheaper fuel will also boost consumer incomes and give relief on corporate margins. So, the growth-inflation mix prospectively looks better than a few months ago, an environment more favourable for equities than bonds. However, equities have already rallied and could be vulnerable to profit-taking in the short term.”