Global financial markets have been focussed on the implications of the Trump administration and, more recently, on the impact of the Fed’s decision to start going further down the path to more normal interest rates. On balance, equities have benefitted, as investors have looked to somewhat improved global growth prospects, mostly down to likely faster growth in the United States. Income-oriented asset classes, however, have been badly hit as short- and long-term interest rates have risen, and there is likely more pain to come. In New Zealand, the economic outlook continues to strengthen from an already robust position, but equities and property have not benefitted in step with the firming business cycle and may continue to face a revaluation challenge from rising bond yields.
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