Duncan MacIness (pictured) co-manages the Ruffer Investment Company alongside Jasmine Yeo.
«We stick to our increasingly unfashionable belief that record monetary tightening's full impact has yet to be felt,» the managers said in their monthly fund report.
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MacInnes and Yeo warned that China's re-opening had been «sputtering», as its $60trn property market has struggled after years of regulatory pressure and shaken household confidence.
«We believe fatter market tail risks from China's economy — and politics — will remain with us for years to come. Expect surprises,» the managers added.
Ruffer's managers argued that even «America's remarkably robust economy is displaying cracks», pointing to revisions to GDP and payrolls data, a rise in credit card delinquencies and slowing consumer confidence.
Despite developed economies so far dodging a recession, they stated that a decade of low rates and faster nominal GDP growth had «likely deferred — but not de-fanged — the biting point».
Changes to interest rates usually take between 12 and 18 months to pass through to the real economy, and with the Federal Reserve beginning its hiking cycle 18 months ago in March 2022, MacInnes and Yeo expected the full effects to still be on the horizon.
This fear is compounded by the potential for inflation to surge again, as base effects and energy prices «switch from being disinflationary tailwinds to inflationary ones», they said.
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If economies fail to return to meaningful growth, this could «raise recession risk by forcing central banks to stay inappropriately tight», the managers explained, while
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