is Running Out of Steam– how about inflation?



Global equity markets fell sharply over September in response to ongoing monetary tightening by global central banks, who also signaled their intentions to increase rates further. The prospect of higher rates raised concerns about how aggressive monetary tightening may negatively affect global economic activity and trigger a worldwide recession.

The U.S. Federal Reserve Board (“Fed”), Bank of Canada (“BoC”), European Central Bank (“ECB”) and Bank of England (“BoE”) all raised their key interest rates during the month. But business activity across many major economies posted relative weakness in September, prompting more recessionary worries. As reported in September, inflation cooled in Canada and the U.S. in August but remained elevated. Inflation in Europe and the U.K. continue to tick higher. China’s economy struggled under the weight of lockdown restrictions, supply chain challenges and slower global economic activity.

In Canada, the S&P/TSX Composite Index declined, hindered by weakness in the Communication Services sector. The S&P 500 Index dropped over 9%, while the tech-heavy NASDAQ Composite Index fell over 10%. Yields on 10-year government bonds in Canada and the U.S. both moved higher. The price of oil and gold both dropped over the month.

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