. But the new UK chancellor has crashed into a rekindling romance between asset managers and debt markets all around the world in impressive style.
That most traditional model of investment portfolios – 60 per cent in equities and 40 per cent in boring old bonds – had failed. Data crunched by Charlie Bilello, at Compound Capital Advisors, show that a theoretical portfolio built along those lines comprising the SP 500 and 10-year Treasuries had lost 16 per cent by September 19, a huge hit this year as both sides of the mix – stocks and bonds – fell.
How would they meet those demands? By selling gilts, of course, sending the yields higher still. It was like an Escher painting from hell.We Britons like to tell ourselves we are terribly important. In reality, UK markets are generally a sideshow for investors elsewhere in the world. But, quickly, this spiral of doom drew in other markets.
The whole experience has reinforced for Kopf that as central bank support for markets melts away, long-hidden stresses and strains come to the surface. “There’s a greater degree of fragility in the market than people realise,” he says.