The key financial event so far in September was the US Consumer Price Index (CPI) release on 13 September.
After the rally in financial markets in July, almost all financial markets fell sharply in the final week of August.
As the earnings season continued, there was little to disturb the rally in equities with the US S&P 500 finishing last week with a fourth straight positive week.
n a month where inflation numbers in the US, UK and Europe climbed higher again, most financial assets had their best month for around two years.
inancial markets have been volatile in the first half of July. Economic data has underlined the difficulties facing central banks and their governments.
Central bank rhetoric in western developed economies has evolved into a greater determination to arrest inflation through tighter monetary policy via higher short-term interest rates
As we said in May’s mid-monthly update, monetary policy is about being seen to be doing something in the face of steep increases in inflation in developed economies.
May saw financial asset prices reflect a concern over how high western central banks would hike official short-term interest rates First signs of inflation peaking in the US and an indication of the US Federal Reserve becoming more pragmatic to avoid a recession later in May, brought about some respite for risk asset prices after a torrid time in the first three weeks of May.
Monetary policy is about being seen to be doing something in the face of steep increases in inflation in western economies.
Another tricky and turbulent month for investors. While there were bouts of movements in the opposite direction, it was a case of equities down, bonds down, commodities steady to firmer, US dollar strong.
utside of watching events unfold in Ukraine and the ‘West’s’ response, the major development for financial markets has been the continued rout in bond markets.
