Tim Fox

It is the uncertainty of a change in policy under a Trump presidency that is triggering some of the traditional signs of investor risk aversion.

The country has to be careful about encouraging growth while not depending on investment fuelled by fiscal spending and credit growth.

Professors Charles Goodhart and Geoffry Wood argue that quantitative easing simply recycles money between the central banks and financial institutions in a sort of 'monetary roundabout'.

The Bank of Japan's monetary policy easing has been one of the constants of the world economy over the past two decades, and this latest round of changes is more of the same. But there has been little observable benefit from it.

There is something a little strange about the US Federal Reserve recently beginning to talk up a rate rise so far ahead of when it is actually planning to do it.

It is still likely that UK growth will take a short term hit and it will take time for the full impact of Brexit to manifest itself.

The way the referendum has been portrayed is akin to the Lehman event of 2008, whereas the reality is likely to be much less severe, for the UK and for the rest of the world.

The falling yield story is not just about Brexit, as yields have been declining now more or less consistently over the course of the past few years.

Already in the first few days of June there has been an Opec meeting, a European Central Bank council meeting, and of course, the pivotal US employment report for last month, which badly disappointed relative to expectations.

Since last month’s meeting, momentum in the US economy has clearly improved, with data for retail sales, consumer confidence, industrial production and consumer prices surprising relatively positively.

The possibility of both Brexit and a Trump victory may not be something that many have considered, or want to consider.

With oil prices dropping persistently below Saudi Arabia’s fiscal break-even level of about US$80 per barrel, it is clear that the room for spending by the government has declined substantially.

The Bank of Japan appears to have merely postponed a decision to ease monetary policy further into negative territory, while the European Central Bank went much further than many had originally thought it would.

With China and the oil price seemingly in a better place, the markets have enjoyed a few positive weeks.

Last week was the week in which sterling finally started to wake up to the possibility of Britain leaving the European Union, or Brexit.