July 2021

July 2021

In last month’s introductory comments we discussed the debates about the future path of interest rates and inflation. As can be seen in the market data on the following pages, actually June was relatively quiet in terms of meaningful rates movements. The latest CPI data is now above 2% but the official line remains that inflation will only briefly spike materially above the 2% policy level. It seems that there is an element of “wait and see” in terms of economic recovery, politicians’ responses to that (“spend it all anyway” vs. traditional prudence, in the UK context), and also – and most crucially – the behaviour of punters as the world stumbles towards the “new normal”.

In terms of our own work the last month has continued to be busy and we’ve seen continued increase in the number and also the quality of discussions about ESG reporting. One fundamental point, of which sight should not be lost in our view, is that actual activities undertaken to improve the ESG profile of any organisation fall into several categories e.g. (i) things you have to do anyway and are just choosing to communicate in a certain way, (ii) things you don’t have to do but would be well-advised to, and sometimes (iii) things you frankly do not have to do. ESG reporting would hardly have the political resonance it has done over the last year or so if this was purely a reporting exercise – the central concept is surely that transparency increases the moral & financial pressure on organisations to do things they don’t have to do, but which we more broadly want them to because they improve the lives of stakeholders. In the language of economics it’s all about “externalities” – the implications of your behaviour for third parties, which you may or may not care about but should… Download full market update