The rise in long-term interest rates over the past period has been driven not only by higher energy prices but also by concerns over public finances and increased demand for capital. In a scenario where the Strait of Hormuz reopens soon (which is by no means certain), we therefore do not expect long-term interest rates to fall to the lows seen just before the Iran War.

Unfortunately, there doesn’t ring a bell at the top. However, a number of developments are currently underway that suggest a significant stock market peak is imminent or has already been reached. If we are proved right and stock prices fall in the coming months, this will, via the wealth effect, also affect economic growth and, consequently, interest rates and exchange rates.

Movements in the major currency exchange rates have been limited recently. However, we think this will change, with the outlook for public finances playing a key role. The situation in the United Kingdom clearly illustrates why…