5 December 2022

Inflation and labour market make financial markets volatile

Last week in the markets was characterised by sudden changes in mood. Concerns about the protests in China soon gave way to Fed Governor Powell’s words, who was hopeful about a soft landing for the US economy. Eurozone inflation data further suggested a slowdown in the pace of interest rate rises, while US labour market data finally brought everyone back down to earth: the road to the Fed’s pivot is still a long one.

Despite this volatility, the financial markets confirmed the trends of the moment, with a clear recovery in the bond segment and the main stock markets holding up. Let’s take a look at some data from our analysis.

In the past week, 74% of the instruments and indices used for our analyses showed a positive variation. Analysing by macroclass, 69% of the equity instruments and indices recorded a positive weekly variation. 94% of the bond instruments and 83% of the other asset classes used for our analysis.

Improving valuations in the past week accounted for 18% of the total. The previous week, valuations that had been adjusted upwards were 9% of the total.

Amongst equity-related analyses, improving valuations accounted for 13% of the total. Mixed signals on inflation and the labour market weighed on the performance.

In the bond analysis, 44% of all evaluations improved. A sign that the bond sector continues to show signs of improvement.

Analyses of other asset classes saw 35% of the total for improving valuations. Analyses relating to commodities, currencies and sentiment fell into this category.

Of the valuations, 17 per cent were above average in the short term. 44% were above the long-term average of valuations. Last week it was 13% and 39% respectively.