Central banks and AI in the driving seat

In September, global bond markets came under pressure amid inflation concerns and hawkish shifts by central banks, while equity markets remained relatively calm, supported by strong economic data and earnings, alongside renewed optimism around AI. 

In fixed income, the average yield on global government debt has moved close to 4% – its highest level since 2007. Central bank tightening and a hawkish tone increased expectations for further rate hikes, pushing the short end of the curve higher and flattening yield curves. Rising funding needs among governments and corporates are also keeping long-end yields elevated.

Oil prices remain news-flow driven. Brent rose to $105 before easing. Understanding whether rerouting efforts in the Middle East will be sufficient is becoming increasingly important for commodity markets. 

Equity markets proved less volatile, as higher-rate headwinds were partially offset by renewed optimism on the AI-theme for new product launches, continued infrastructure spending and positive earnings data. 

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