Highlights
- Major equity indices recorded strong gains and bond yields fell sharply last week as investors breathed a collective sigh of relief after a reassuring inflation print in the US. The S&P 500 Index recorded its best week since June and hit its best intraday level in two months.
- US headline CPI came in at 7.7% for October, lower than the 8% expected and down from 8.2% in the prior month. The core reading which removes volatile components such as food and energy fell back to 6.3% from a 40-year high of 6.6%. In all, the Fed still has work to do, but things are moving in the right direction. Inflationary pressures are still particularly prevalent in the services sector while prices of goods (especially autos) have benefited from some improvements in supply chains.
- The results of the US Midterm elections probably mean that investors can prepare for gridlock when it comes to additional legislative action: The Republicans won a majority in the House of Representatives while the Democrats maintained control of the Senate.
- The European Commission warned of an imminent recession saying it expects Euro Area GDP to shrink by 0.5% in Q4 and by 0.1% in Q1 of next year. Across the Channel, UK GDP fell by 0.2% in Q3, the first quarterly decline since the start of 2021, when the country was in a coronavirus lockdown.
- The governor of the BoJ, repeated the message that the “one-sided and rapid weakening of the yen is undesirable for the economy,” according to Bloomberg. The yen is trading around a 32-year low against the US dollar, largely due to monetary policy differentials.
- Stocks showed further positive momentum at the end of the week on the news that China has shaved its required quarantine for close contacts and international travellers by two days, marking the first relaxation of restrictions of zero-Covid rules since the party Congress last month.
- FTX, the world’s second-largest Crypto exchange was reported to have filed for bankruptcy as customers rushed to withdraw funds. Due to “poor internal labelling of bank-related accounts” said FTX CEO Sam Bankman-Fried, calculations were “substantially off” as to the sums the exchange had lent out to users to let them make leveraged bets.
- This week, markets will be paying attention to Biden-Xi talks in Bali. The in-person discussions will focus on deepening their respective understanding of each other’s priorities and intentions
More
August 2, 2023
NewsBILBoard August 2023 – Challenging re...
The idea that central banks might be finished hiking rates is gaining prominence. In the US, the Federal Reserve has now hiked rates eleven times,...
July 31, 2023
NewsThe dangers of passive investing in c...
Over the past decade, there has been a pronounced shift away from actively managed funds to passive strategies. While we do believe that both types...
July 24, 2023
NewsWhat’s weighing down the German econo...
Germany, the fourth largest economy in the world and the leading economic power in the European Union, began 2023 in recession. Given pale full-year growth...
June 10, 2023
NewsBIL Midyear Outlook 2023
The Landing Process Introduction from our Group Chief Investment Officer, Lionel De Broux Our 2023 Investment Outlook, published back in December, was entitled...