{"id":6936,"date":"2022-11-09T08:00:02","date_gmt":"2022-11-09T08:00:02","guid":{"rendered":"https:\/\/sarasinandpartners.com\/row\/?p=6936"},"modified":"2022-11-08T10:19:30","modified_gmt":"2022-11-08T10:19:30","slug":"the-week-in-markets-9-november-2022","status":"publish","type":"post","link":"https:\/\/sarasinandpartners.com\/row\/think\/the-week-in-markets-9-november-2022\/","title":{"rendered":"The week in markets – 9 November 2022"},"content":{"rendered":"

This week we take a look at the recent interest rate hikes in both the US and UK. Read on to see what this means for markets...<\/h3>\n

US Federal Reserve increased interest rates by 0.75% in response to resilient data<\/strong><\/h3>\n

The Fed raised interest rates by 0.75% last week to 4.0% as economic data showed that the economy and job market were proving surprisingly resilient to previous rate hikes. Chairman Powell confirmed this as he commented that \u201cWe (the Fed) still have some ways to go. And incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected\u201d.<\/p>\n

These comments poured cold water on hopes that the Fed was beginning to consider slowing the pace of rate hikes and potentially pausing rate hiking sometime next year. As a result, US bonds and US equities sold off in tandem.<\/p>\n

Bank of England raise<\/strong>s<\/strong> interest rates by 0.75% but signals less hikes from here<\/strong><\/h3>\n

By a 7-2 majority the Bank of England\u2019s Monetary Policy Committee delivered a \u201cdovish\u201d rate hike of 75bp, from 2.25% to 3.00% (hard though it may be to conceive of the largest one-off hike in the Bank Rate since Black Wednesday in 1992 as \u201cdovish\u201d).<\/p>\n

The dovishness resided in the fact that in the press conference Governor Bailey pushed back against the extent of future rate hikes priced by the market. Prior to the meeting, the market saw the Bank Rate peaking at 4.75% in the second half of next year, and actually still does despite the governor\u2019s pushback. Moreover, the press release stated that: \"Further increases in Bank Rate may be required for a sustainable return of inflation to target, albeit to a peak lower than priced into financial markets\". This is far less forceful language than appeared in the statement accompanying the previous MPC meeting.<\/p>\n

This serves to underline the extreme reluctance of the BoE to hike any more than the bare minimum required to placate the market, owing to the high degree of sensitivity of the UK economy to interest rates (above all via mortgages\/housing market). We suspect that persistent inflation may force its hand next year, exacerbating the already severe and protracted UK recession it currently forecasts.<\/p>\n

Market review<\/strong><\/h3>\n

The Chinese equity market was the best performing major market last week as rumours swirled that officials had started considering how the country would step away from the Dynamic Zero-Covid policy. Chinese equities gained over 10% during the week. Elsewhere, US equities were down in response to hawkish rhetoric from the Federal Reserve.<\/p>\n

Bond markets were generally down over the week while commodities were broadly flat.<\/p>\n

\n

Important information<\/strong><\/p>\n

All details in this article are provided for information purposes only and should not be misinterpreted as investment advice or taxation advice.<\/p>\n

Where the data in this article comes partially from third party sources the accuracy, completeness or correctness of the information contained in this publication is not guaranteed, and third-party data is provided without any warranties of any kind.\u00a0 Sarasin & Partners LLP shall have no liability in connection with third party data.<\/p>\n

\u00a9 2022 Sarasin & Partners LLP \u2013 all rights reserved.\u00a0 This article can only be distributed or reproduced with permission from Sarasin & Partners LLP.<\/p>\n","protected":false},"excerpt":{"rendered":"

This week we take a look at the recent interest rate hikes in both the US and UK. Read on to see what this means for markets... US Federal Reserve increased interest rates by 0.75% in response to resilient data The Fed raised interest rates by 0.75% last week to 4.0% as economic data showed...<\/p>\n","protected":false},"author":73,"featured_media":12391,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[],"coauthors":[191],"class_list":["post-6936","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets"],"yoast_head":"\nThe week in markets - 9 November 2022 - Sarasin & Partners Global<\/title>\n<meta name=\"description\" content=\"Following interest rate hikes in both the UK and US, we look at what this means for markets in our weekly macroeconomic update.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/sarasinandpartners.com\/row\/think\/the-week-in-markets-9-november-2022\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The week in markets - 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