Investors remained focused on the release of inflation data and how ongoing pricing pressures might affect monetary policy settings in key regions.
Generally speaking, inflation is not coming down as quickly as policymakers had hoped and interest rates could therefore remain elevated for longer than was previously anticipated.
These evolving interest rate forecasts saw bond yields rise in most major markets and hindered returns from fixed income.
Equity returns were mixed. Australian indices closed the month lower, although returns from overseas markets were stronger.
The proposed increase to the debt ceiling in the US – after borrowing had crept up towards the previously-permitted limit – was passed by the House of Representatives. The proposal will now move to the Senate, where endorsement is anticipated. This potential issue therefore appears to have been averted and is not expected to materially affect financial markets.
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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.
The global economy is being shaped by conflicting triggers. These include productivity-boosting technology innovations, geopolitical tensions and the strident efforts of central banks to bring inflation under control. We examine the economic outlook and discuss the implications for your retirement savings.
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