• Markets struggled in October as stronger economic data kept central banks hawkish, adding fuel to the “higher for longer” rhetoric.
  • Shocking events in the middle east added to market uncertainty, given the unknown market impact, and implications for energy prices.
  • Australia’s quarterly inflation numbers reinforced what the monthly series had been pointing too – stickier inflation. Prices were up +1.2% q/q in the third quarter, driven by rents higher fuel prices and insurance costs. Annual inflation standing at 5.4% and drifting lower.
  • Reserve Bank of Australia (RBA) left its cash rate unchanged at 4.10%, for four consecutive policy meetings, but no indication that the RBA has completed its rate-hiking cycle.
  • Australia’s job ads were down 3.0% in October, 11.4% lower than in October 2022 – which is expected as businesses tackle elevated inflation and higher costs.
  • Equity markets continued their retracement in October as investors reacted negatively to rising bond yields and geopolitical events.
  • The US recession that was widely predicted has yet to arrive, with Q3 U.S. GDP rising 4.9% amid strong consumer and government spending. However, these drivers could be short-lived as consumer saving rates decline from 5.2% to 3.8%, while facing tighter lending conditions, and higher interest payments.
  • Sovereign bond yields surged throughout the month, as US Treasury yields rose to 5%.
  • Still, US inflation is significantly lower than peak 2022 levels, US economic growth has been resilient, and the S&P 500 remains up +10.7% y-t-d as investors anticipate the Fed could begin the aggressively cut interest rates as soon as the first half of 2024.
  • October’s euro-zone consumer sentiment report was released, the index indicated euro-zone sentiment had deteriorated for a third consecutive month.
October 2023 Download Report