• Falling inflation and changing communication from the Fed boosted bonds and equities in November.
• The inflation and growth trend is positive for bonds, with US bonds recording their best month in November since May 1985.*
• After this strong rally, markets will likely focus on the upcoming communication from Central Banks, due in mid December.

November has been an exceptional month with global 50% bonds and 50% equity allocation posting the second highest monthly performance in 30 years, just slightly below the Nov-2020 post Covid rebound. With inflation coming down, the communication from the Fed has changed turning more comfortable with the current levels of rates. Expectations of a potential soft landing of for the US economy (deceleration in growth with no recession) also contributed to the optimism. However, future monetary policy depends on how soon inflation returns to target level, and the extent of the economic slowdown. Thus, from here the market direction going forward is less clear. Regarding bonds, despite the recent reduction in yields, they still offer value and they could also benefit in case of a further economic slowdown which has not yet been priced in by the market.

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