During the first sessions of the month, the markets continued with the declines seen in September due to fear of a possible stagflationary scenario. The published inflation figures continue to remain at very high levels (5.4% in the USA and 3.4% in Europe) while the main growth indicators show signs of deterioration. The significant rise in energy prices contributed greatly to this. Oil stood out, which in its WTI reference reached a maximum of $ 85.41 / barrel, a level that had not been touched since 2012.
However, the stock markets completely reversed the trend and allowed to close the month with significant gains, reaching new all-time highs on Wall Street. A seasonally bullish period begins in October that usually lasts until the end of the year. In addition, this time a very positive start to the Q3 results campaign helped. The reading of the Fed Minutes confirmed the possible timing of the Tapering. It would be announced imminently during the November meeting. It would start in December and end in mid-2022. The volume of purchases would be reduced by 15,000 million per month. It is worth noting the fact that only half of the members of the Fed are in favor of raising rates before December 2022.
For its part, at the ECB meeting it was confirmed once again that for the institution the rise in inflation continues to be temporary. Despite this, Lagarde reported that the high price levels would last longer than expected and that before initiating a fall in the CPI there would probably be more increases.
Regarding debt, there was a notable upturn in volatility, both in the USA and in Europe. The IRR of the 10Y USA rose to 1.70% and then fell with some intensity. Since the current downtrend began in mid-August, the North American 10-year has dropped close to 4.0% in price. In Europe, the negative trend that government bonds have been showing in recent months continued. The contagion effect on corporate emissions is becoming important. The 10-year German benchmark stands out, trading close to positive terrain when its IRR was close to -0.50% in August.
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