.jpg)
What we’re thinking about markets right now
Not much has changed since last month, and that’s broadly the point.
If anything, one number has moved in the right direction.
Over the last few months, the picture has been a steady one. Interest rate expectations have crept higher rather than lower, mainly because the oil price climbed after events in the Middle East. Higher oil feeds into inflation, and inflation has been a little stickier than people hoped. So the cuts that markets were expecting earlier in the year have quietly been priced out.
That’s the backdrop. It isn’t especially comfortable. But it isn’t alarming either.
The one number worth mentioning
We keep a rough estimate of the chance of a US recession over the next year. It’s not a crystal ball. It’s a way of staying honest with ourselves about the risks.
Last month it sat at around 33%. This month it’s closer to 29%.
A good part of that improvement is simply the oil price starting to come back down.
To put 29% in context, in any given year the long-run baseline chance of a recession is around 16%. So we’re still a little above normal, but not dramatically so. Nothing in the recent data, particularly on jobs, points to a recession arriving any time soon.
What would actually make us do something
This is the part we think is worth being clear about, because it’s where a lot of the reassurance lives.
A number drifting up a few points doesn’t move us. We treat anything above 25% as worth paying closer attention to, which is where we are now. But the point at which we’d start meaningfully reducing risk is higher, and it has to line up with something else: markets looking expensive, crowded, everyone leaning the same way.
It’s the combination that matters. A rising recession risk and a market priced for perfection is when we act. A rising recession risk on its own, with markets behaving sensibly, mostly just means we watch more closely.
Right now the data says be a little cautious, and the market, fairly, isn’t panicking. The two roughly agree. So we don’t feel the need to do very much.
What this means for you
Your portfolio stays balanced and fully invested.
We made no changes this month and there’s no rebalance. We’re not trying to predict recessions or trade the headlines. We’re trying to judge whether the risks you’re taking are being fairly rewarded, and whether markets are pricing the world ahead sensibly.
At the moment, markets don’t look euphoric and they don’t look frightened. That tells us patience is the right setting.
If things genuinely deteriorate, we’d expect to see it in the jobs numbers and in that recession estimate climbing, and we’d act accordingly. If inflation settles and rate worries ease, markets may simply grind on. Either way, the plan is to stay diversified, avoid overreacting, and keep the room to move if the picture really changes.
Next Investment Committee Meeting
The next ICM is scheduled for 17 July 2026.