Recession fears creeping back

Financial markets are in one of those occasional periods where the world’s economic realities do not quite seem to match what some asset price moves seem to want to tell us. Last week and continuing the trend from the previous week, we saw a further rise in global long bond yields despite some weakness signals from the global economy. The 10-year US Treasury benchmark hit a yield of 4.88% in early trading last Tuesday – the highest point in 15 years. Other government bond markets duly responded, although rose slightly less. Because of the inverse correlation between yields and bond valuations, this means that fixed interest government bond prices fell. Subsequently, yields fell back from the highest levels but are now heading back towards their highs after another extremely strong US jobs report. Across the board, they are 0.15%-0.30% higher than the previous Friday, which equates to a fall in in the global bond index price of about 1.5%.

September 2023 asset returns review

September was a little rough for global investors. In aggregate, global equities fell through the month, with the US and Europe as its largest constituent declining. UK, Japan and Emerging Markets (EM) on the other hand finished mildly stronger.

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