This month:
- Interest rate hikes continues to take place, with Central Banks continuing their march higher. The Reserve Bank of Australia raised interest rates by another 0.25% in early December and the US Federal Reserve is expected to again hike rates when they meet in mid-December.
- Inflation remains significantly elevated, but the annual headline inflation rate in the US slowed for the fourth month running to 7.7%, which was below the consensus market forecast of 8.0%. Even US core inflation, which excludes food and energy declined slightly in the most recent publication to be at 6.3% year-on-year, down from September’s 40-year high of 6.6%. These latest results are making people hopeful that inflation has now peaked in the US.
- Most forward-looking economic indicators continue to point to a recession across most of the developed world. As stated in previous months, unemployment remains completely at odds with this scenario, as Australian, US and European unemployment figures all remain at or near record lows.
- The S&P 500 had another good month in November, up around 5.4% after gaining around 8% in October. In Australia, the S&P 200 rose again by around 6% for the second month in a row. In Australia, Value and Momentum were the best performing styles for the month, while globally, Equal-Weight and Quality were the best performers.
- November was a good month for Fixed income markets. Australian bonds as measured by the Bloomberg AusBond Composite 0+ Years Index gained 1.5%, while Global Bonds as measured by the Bloomberg Barclays Global Aggregate Total Return Index Hedged into AUD returned 2.4%. Credit markets also had a very favourable month in November, with Investment-Grade returning 4.1%, while High Yield returned 4.0%.
Read the full Monthly Economic Wrap prepared by IOOF Research here.
