Dear Reader,

Today's overview of economic news and market action:

• • It was a week of two halves on financial markets last week …
  • Risk appetite was soft at the start as bond yields rose sharply …
  • However, as yields declined, risk appetite improved …
  • Similarly, the dollar was on the front-foot, but moved off its peak at the end of the week … 
  • EUR/USD opens this morning in the top half of $1.05-1.06 … 
  • GBP/USD is just below $1.22 … 
  • EUR/GBP is in the 86-87p range …
  • This week, the US labour market report (Sep) will be the highlight …

When September Ends

September has proved to be the worst month so far in 2023 for bond markets and equities, largely on the back of the “higher-for-longer” mantra from central banks on interest rates. 

BoE holds rates at 5.25% in finely balanced decision

After fourteen consecutive rate hikes, stretching back to December 2021, yesterday’s meeting of the Bank of England’s Monetary Policy Committee (MPC) saw the central bank leave rates unchanged at 5.25%.

Fed leaves rates unchanged in a hawkish hold

As had been well signalled, the US Fed left official interest rates unchanged at the conclusion of its policy meeting.Thus, the target range for the funds rate remains at 5.25-5.50%. 

Many Headwinds Make for Difficult Landing

The latest quarterly update from the OECD on the outlook for the global economy was published last week.