Markets send mixed signals
Risky asset and sovereign bond markets seemed to send mixed signals during the period under review. Equity indices rose further globally, with emerging market economy (EME) stocks climbing in September. In conjunction with corporate spreads remaining extremely compressed, this underpinned exceptionally accommodative financial conditions in many jurisdictions. In sharp contrast, government bond yields declined steeply in advanced economies (AEs), even as the expected monetary policy stance tightened somewhat, thus hinting at a certain degree of investor unease about the economic outlook further down the road. Concurrently, the US dollar started appreciating, conceding some ground only later in the quarter.
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