“You Retire Once… I Help People Retire Everyday”
October was a volatile month for financial markets with equities eventually moving lower after a strong rally during the first nine months of the year. Growth risks remained the primary concern for investors, despite signs of resilience, particularly in the US economy. Uncertainty during the month was also heightened by the widely anticipated U.S. election and the potential implications of a policy shift on inflation and interest rates.
In the US, the September CPI (consumer price index)report indicated that inflation eased by less than expected. Headline CPI rose by 0.2% month-over-month and 2.4% year-over-year, marking the slowest annual increase since early 2021. However, core inflation remains sticky and elevated at 3.3%, driven by rising costs in medical care, auto insurance and airline fares.
The resilience of the US economy and uncertainty surrounding potential post-election policy changes prompted a more gradual re-pricing of the anticipated Federal Reserve (Fed) rate cuts. Following the Fed’s 50 basis point interest rate cut in September, the sticky core inflation reading highlighted the challenges facing US policy makers if they are to achieve their dual mandate of maintaining a solid labour market alongside price stability. Rate cuts are still expected in November and potentially December, but a strong labour market and resilient inflation has reduced the likelihood of a 50 bp cut at either of these meetings.
The cooling in rate cut expectations, alongside election uncertainty, pushed both the 2-year and 10-year Treasury yields above 4.0%marking quite a spike in change since mid-September.
Click on the attachment at the bottom to read the full edition of this months Market Perspectives as I unpack the recent election results, how it impacts markets and why perhaps we shouldn’t mix politics into our portfolios. Additionally, we recap everything that happened in financial markets for the month of Octobers, explore the similarities (or differences) between 1999 and today , and discuss why perhaps investors should be excited as we move into a post-election period into the historically strongest period for investors in the calendar year.
I hope you enjoy the read.
In closing, I want to stress my appreciation in the trust and faith you put in both myself and Sterling Mutuals. My commitment to you, a valued investor and partner, is and always will be to continue to share my unbiased opinion of what is really happening. While my message often seems bullish, I have learned that being optimistic we will get it right more often than wrong. Furthermore, putting context into what is happening in financial markets helps clients become well informed, better educated, and ultimately successful investors.
Regardless of the path ahead, you can be confident that you have an investment professional in your corner who is committed to your success every step along the way.
Thanks for taking time out of your day to become better informed.
-Aaron Pedlar
