Investors continued to focus on rampant inflation and, in turn, potential changes in monetary policy settings.
By month end, five interest rate increases in the US had been priced in to markets; a more aggressive tightening in policy settings than had been anticipated previously.
These evolving expectations saw bond yields rise in all major regions – resulting in negative returns from fixed income markets – and
spooked share markets. Major equity indices in the US, Europe and Australia all closed January substantially lower.
Manufacturing PMI in November increased to roughly 50, hovering near the breakpoint between expansion and contraction.
Rising living costs have made it tricky for many Australians to make ends meet.
The presidential election in the US on 5 November could dominate headlines during October, before the next meeting of the Federal Reserve later that same week. Investors are already debating whether a further reduction in borrowing costs in the US could be announced following this meeting.
