Global equities reached all-time highs in October, led by strong momentum in the AI sector in the US, expectations of Fed easing, and positive sentiment around fiscal expansion in Germany. However, a resurgence of the US-China trade spat, concerns over some credit events in the US, and continuing US government shutdown created volatility in risk assets. While the US and China have extended their truce, we’d like to see how effectively this is sustained in the long term. 

This uncertainty earlier boosted the safe-haven appeal of bonds, pushing down yields in US, Europe, and the UK. Concerns persisted, however, over the effect of government spending on deficits, debt and fiat currencies in the long term (debasement). As a result, gold touched record levels, although prices have retraced. Fiscal risks were also evident in Japanese yields, and caused a sharp fall in the yen.

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