📈 Weekly Market Update | Week Ending 29 Sep 2023

• 🇺🇸 US 10-year treasury yield extends to a 16-year high

• 🇯🇵 Japan's 10-year bond yield holds up despite intervention from the Bank of Japan

• 🇬🇧 The British Pound rebounds from a 6-month low while the Bank of England holds rates steady

1. US 10-year treasury yield extends to a 16-year high

The yield on the US 10-year Treasury note surged to 4.65%, the highest since July 2007, amid concerns that interest rates will remain higher for longer. Initial jobless claims held close to the over-seven-month, going against expectations of a steeper increase and consolidating recent evidence that the US labour market remains tight. Furthermore, recently released official data on US GDP has confirmed a substantial growth rate of 2.1% for the year's second quarter. The increasing US national debt, which surpassed $33 trillion last week, has also exerted downward pressure on US Treasury prices.

Stocks in the US were mixed during the last trading day of the September quarter as sentiments were negatively impacted by concerns about a potential government shutdown and the expectation that interest rates would remain at historically high levels. The Dow Jones index experienced a decline of over 100 points, primarily due to significant drops in the share prices of Walmart and Chevron, both of which fell by more than 1%. The S&P index saw a slight decrease, while the Nasdaq index managed to gain 0.3%. Recent data indicated that the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, increased less than expected in September. The annual rate of the PCE index came in line with forecasts. For the week, the Dow Jones and S&P 500 are down -1.34% and -0.74%, respectively, while the Nasdaq squeezed out a slight gain of 0.06%.

2. Japan's 10-year bond yield holds up despite intervention from the Bank of Japan

Meanwhile, in Japan, despite intervention by the Bank of Japan to reduce yields, Japan’s 10-year government bond yield continues to hover at highs above 0.75%. On September 29th, the central bank purchased 300-billion-yen worth of bonds with maturities ranging from 5 to 10 years. In late July, the yields on Japanese Government Bonds (JGBs) initially rose after the Bank of Japan eased its control on interest rates. This allowed the 10-year JGB yield to surpass the upper limit of 0.5% and set an effective cap of 1%. The decision was made in response to the surge in government bond yields worldwide, driven by major central banks implementing aggressive monetary tightening to combat inflation. Speculation has arisen that this global trend would prompt Japan to abandon its policy of negative interest rates, but the Bank of Japan has pushed back on this by maintaining a dovish stance during the September policy meeting.

3. The British Pound rebounds from a 6-month low while the Bank of England holds rates steady

After hitting a six-month low of $1.2108 on September 27th, the British pound has rebounded above the $1.22 level. This recovery was driven by data indicating that Britain’s economy has outperformed previous estimates since the start of the pandemic. The latest GDP report revealed a 0.2% growth in the second quarter, maintaining a 1.8% lead compared to the final three months of 2019, which was the last complete quarter before the COVID-19 outbreak. Additionally, despite a decline in mortgage approvals to a six-month low, consumer borrowing gained momentum in August, as shown by Bank of England data. On the policy front, the Bank of England kept interest rates unchanged during the September meeting but expressed a commitment to maintaining elevated rates for an extended period.

---

➡️ Follow us on:

Instagram: your.wealth.accumulator

TikTok: @retirement_hack

---

This Weekly Market Update is curated and sourced from Bloomberg and various financial news.

Disclaimer: For general information only and shared with our clients on a restricted basis. The information isn't meant to provide a sufficient investment decision basis. It shall not be regarded as an offer, recommendation, solicitation or advice to buy or sell any investment product. It shall not be transmitted, disclosed, copied or relied upon by any person for whatever purpose. The commentaries and/or views expressed herein are the writer's views at the time of issue and may change over time. Please don't rely on and/or act on the information in these commentaries or views without asking for professional advice.