- The week opened with concerns over rising inflation and interest rates still to the fore. Fears over Evergrande were also very much in focus with the Chinese property giant missing another interest rate payment.
- Mid-week a number of announcements began lifting sentiment, not least the news that the US and China had agreed that their presidents would meet virtually before the end of the year.
- Huw Pill, the Bank of England’s new Chief Economist indicated that high inflation may last longer than previously expected and Bank of England Governor Andrew Bailey gave a warning this weekend that there will be a “very damaging” period of inflation unless policymakers take action.
- The official ECB line remains that inflation will abate next year with Christine Lagarde, ECB President, stating again that “we should not overreact to supply shortages or rising energy prices”.
- Our Breadth indicator stayed neutral but our Momentum Indicator ticked lower again.
- Markets bounced back from the previous week’s losses and finished higher. The energy sector out-performed, as did Financial stocks with the growing anticipation of rising rates.
- US technology stocks were hit particularly hard on Monday with heavyweights like Apple, Alphabet etc down more than 2%.
- The US 10-year Treasury Yield rose back above 1.5% on Tuesday but equity markets began rallying back after the US Senate voted to lift the debt ceiling and avoid a credit default that would have been “catastrophic” according to Treasury Secretary Janet Yellen.
- On Friday the much-anticipated US non-farm payrolls report for September was released. A strong report would have increased the chances that the US Fed will begin tapering in November. Instead, the data showed that less than 200,000 jobs had been added, well below expectations of 500,000.
- Our Breadth Indicator stayed negative and our Momentum Indicator ticked down.
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