Analysis of the stock market through 21st October 2022 from Realm Investment Management

Markets calm after Rishi Sunak wins

Markets calm after Rishi Sunak wins

The yield on the UK 10yr Gilt has fallen back below 3.8% today on news that Rishi Sunak will be the new Prime Minister. This chart shows the recent ups and downs of the Gilt yield. This chart gives a long-term perspective. Equities have moved higher today.

Data last week showed UK inflation back at a 40-year high. CPI for September rose to 10.1%.

On Friday, the US Treasury 10yr yield reached its highest level since 2007.

According to a recent survey of economists, the European Central Bank will be more aggressive in tackling inflation. The ECB’s deposit rate is expected to reach 2.5% by March, which includes a 0.75% hike this month.

US Stocks were higher last week on better-than-expected 3rd-quarter earnings reports but particularly after the Wall Street Journal reported that some Fed officials were concerned about over-tightening and wanted to both “slow down the pace of increases soon and to stop raising rates early next year”. Investors are now seeing the possibility of the central bank only raising rates by 0.5% in December rather than the 0.75% previously expected.

Chinese stocks fell sharply today (Monday) and the Yuan fell to its lowest level relative the US Dollar since 2008 following leader Xi Jinping’s move to tighten control over his country. On the weekend he claimed a third term as Communist Party Leader and promoted loyal allies. The Hong Kong Hang Seng index fell sharply to its lowest level since 2009.

UK Market Chart 21st October 2022

US Market Chart 21st October 2022

US Risk Barometer 21st October 2022

Europe Risk Barometer 21st October 2022

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This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

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