Market News – October 2016

AlisonMarket Commentary

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Q3 2016 Highlights

  • Capital markets quietly booked gains over the sleepy summer months, but woke up to a number of newsworthy events in September.
  • Central bank action (and inaction):
    • The Bank of England cut rates (down to 0.25%) and boosted its quantitative easing program in an effort to allay economic concerns over June’s surprise Brexit vote – the fallout from which has been less severe than expected.
  • The European Central Bank (ECB) fell short of market expectations by failing to expand their accommodative policy and lower interest rates.
  • The US Federal Reserve (Fed) held rates steady, pushing back expectations of a rate hike into December.
  • The Bank of Japan (BoJ) went further down its path of unconventional monetary policy by announcing a yield-curve control mechanism to its asset purchase program.
  • As expected, the Bank of Canada maintained its target for the overnight rate at 0.5% per cent.
  • Fixed income markets were driven by a drop in yields over the course of the quarter. September was particularly active as the ECB’s decision drove rates meaningfully higher, only to be followed by the Fed and BoJ’s decisions reversing the course and pushing yields lower yet again.
  • A surprise announcement out of OPEC caused oil prices and energy company shares to rise on hopes that global oil production would be reduced.