Although volatility remained elevated, developed equities rebounded this month returning 7.2%. The same can’t be said for other markets: emerging market equities fell 3% over the month and bond yields globally continued to climb with 10year yields in the US reaching 4.2% before settling a little lower at month end. Global bond markets as a whole were down 0.7% for October. Gold – a dollar-denominated metal – also drifted lower by 1.6%, weighed down by persistent US dollar strength.
The escalating tensions between Russia and Ukraine in October heightened geopolitical concerns which have plagued the markets throughout 2022. However, good news for investors came in the form of easing supply chain issues which led to growing optimism towards the end of the month that central bank rate hiking schedules may slow. The UK found itself with a new Prime Minister and Chancellor of the Exchequer which helped to unwind the economic turmoil it was thrown into at the end of September, and Europe made considerable steps towards reducing the effect of the energy crisis. The tough global economic outlook and geopolitical tensions remain sources of strength for the US dollar.
Investors continued to be bogged down by high inflation data which, coupled with the unwavering strength of the labour markets, support persistent hawkish activity from central banks. A milestone hike of 0.75% was made by the ECB (European Central Bank) on the 27th October and the Fed (Federal Reserve) and BoE (Bank of England) is expected to mirror this action early November.
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