Category :

Global Navigator: A ray of optimism breaks through

Global Navigator: A ray of optimism breaks through

By an underwhelming margin, October’s headline number for US inflation came in below expectations of a 0.1% drop to 8%. But the reaction from investors during the second week of November to the 7.7% figure suggested that many believe the inflationary tide in the US has turned and peak interest rates will arrive sooner, and at a lower level, than previously feared.

Global Navigator: Another week of mixed signals

Global Navigator: Another week of mixed signals

Investors came into November anticipating a pivot towards Republicans in the US mid-term elections and fearing that October’s inflation data would set the stage for another 75 basis point rate hike by the US Federal Reserve after their December meeting. But the ‘red wave’ was blunted by a green breakwater of younger voters and price growth in the world’s largest economy last month slowed to 7.7% year-on-year.

Global Navigator: Ready for the times to get better

Global Navigator: Ready for the times to get better

Impending rate hikes from the European Central Bank and US Federal Reserve. The striking selloff experienced by Chinese assets. Mixed earnings reports. Russia’s invasion of Ukraine heading into its ninth month. That may be yesterday’s news, if flows to EPFR-tracked Equity and Bond Funds during the fourth week of October are any indication.

Global Navigator: Investors bracing for a cold winter

Global Navigator: Investors bracing for a cold winter

With rising prices and higher interest rates joining, for the moment, death and taxes on the list of life’s certainties, investors kept reducing risk and unshackling themselves from fixed income assets in mid-October. EPFR-tracked Bond Funds posted their ninth consecutive outflow, a run that has seen over $80 billion pulled out of this group, while redemptions from Alternative and Balanced Funds since the final week of August stand at $17 billion and $31 billion, respectively.

Global Navigator: Leaves are not the only things turning red

Global Navigator: Leaves are not the only things turning red

Risk reduction and defensive positioning remained high on most investors’ lists during the second week of October as the Nasdaq index it its lowest level since late 3Q20 and US 30-year mortgage rates tested the 8% level. With the UK’s bond market giving investors a reminder of what a collision between recession-fighting fiscal policy and inflation-fighting monetary policy looks like, missiles flying out of Russia and North Korea, the latest US core inflation doing nothing for hopes of restraint by the US Federal Reserve in early November and the third quarter earnings season on the horizon, investors had plenty of other reasons to tack towards safety.

Global Navigator: Market stability remains elusive

Global Navigator: Market stability remains elusive

In early October two of the major ratings agencies downgraded the outlook for British sovereign debt from stable to negative. For investors it was a familiar story. For much of 2022 stability has turned to instability, certainty to uncertainty and hope to fear across most asset classes. The result has been growing market volatility and a growing defensiveness on the part of those investors.

Global Navigator: British pounds of flesh on market’s menu

Global Navigator: British pounds of flesh on market’s menu

Investors, who were already struggling to digest the latest US interest rate hike, were confronted with more unappetizing fare during the fourth week of September. This included Italy’s marked shift away from centrist politicians, the sabotaging of pipelines connecting Europe with Russian natural gas fields, Hurricane Ian’s advance on Florida and a market-jolting budget from Britain’s new Chancellor of the Exchequer.

Global Navigator: Monetary collar tightens again

Global Navigator: Monetary collar tightens again

The third week of September began with investors buying US equities on the dip and Ukraine’s army rolling back Russian invaders around the city of Kharkiv. It ended with Russia mobilizing the first of 300,000 reservists and short-term US interest rates at their highest level since 2008.