US inflation data and the UK government’s spin
Last Update: 27/12/2024
The week just gone on the financial markets was dominated by US inflation data and the UK government’s spin on fiscal policy choices. What ‘triumphed’ in the end was once again concern about new rate hikes and a subsequent possible recession.
On the US inflation front, the September core figure continued to rise, hitting a new record high since 1982 and definitively dampening speculation of a possible short-term end to the Fed’s rate hikes; the UK government, on the other hand, avoid further tumbles in the government bond market by backtracking on the tax cut . Imminent danger is averted but reputation of the executive remains very compromised.
Let’s take a look at how our analysis moved overall.
In the past week, 28% of the instruments and indices used for our analysis showed a positive change. Seventy per cent experienced a negative change. Analysing by macroclass, 33% of equity instruments and indices recorded a positive weekly change. 15% of the bond instruments and 8% of the other asset classes used for our analysis.
Improving valuations in the past week accounted for 38% of the total. The previous week, valuations that had been adjusted upwards were 43% of the total. The most conspicuous improvements were in the alternative asset classes to equities and bonds, with the latter recording the lowest percentage improvement.
In detail, among the analyses relating to the equity segment, improving valuations accounted for 42% of the total. Among analyses relating to bonds, improving valuations accounted for 31 per cent of the total. Among analyses relating to other asset classes, improving valuations accounted for 45% of the total.
Of the valuations, 44% were above average in the short term. 24% were above the long-term average of valuations. Last week they were 46% and 29% respectively. All in all, therefore, a further downward slide that still signals great uncertainty for the financial markets.
The new analysis on duration selection made its entrance this week in the bonds’ section, while among the market sentiment analyses you can now also consult the one on the relationship between financial markets and the business cycle.
