But this rise in volatility pales by comparison to the bond markets, most notably the UK bond markets, which have seen some dramatic moves.  The Federal Reserve raised the Fed Funds rate to 3.25% and the US ten-year yield moved up again, nearing 4%.  In the UK, the Bank of England lifted the Base Rate to 2.25% but this was eclipsed by the new administration’s ‘Fiscal Event’ a shockingly inept ‘amateur hour’ display from the new Government, made even worse by the prior sacking of Tom Scholar as Permanent Secretary to the Treasury.  

Panic ensued in the Gilt market with a near total collapse in prices at the long end of the Index-Linked market e.g. UK Treasury I-L 0.125% 2073 stock, issued at 356p in November last year sank to just 50p.  The Bank of England was compelled to step in to steady the market, which remains in a highly febrile state.  It remains to be seen whether the Truss/Kwarteng plan can survive the publication of the rest of the budget at the end of the month.  The UK ten-year yield moved up to 4.5% with accompanying falls across all maturities.  The Fed’s rhetoric continues to boost the US dollar, which reigns supreme for the moment.

American stock markets moved back down to test the June lows, the S&P 500 by 7% over this period and the Nasdaq by 8%.  All the leading world markets weakened in the wake of the turmoil in bond markets, by around 7.5% on average.  On the face of it the UK FTSE 100’s fall of just 5.4% looks surprising, but this reflects the dominance of major US dollar earning companies in this index, the FTSE 250 Index is more representative of the mood and is down by 10%. 

There was little relief to be found at the sector level.  The oil price picked-up a shade as OPEC (incredibly) promoted production cuts, Exxon gained a few percent, and the others were little changed.  Similarly, one or two of the leading miners gained a shade, Rio Tinto was the best with a 5% gain while Barrick Gold and Newmont edged ahead.  The pharmaceuticals produced a few bright spots with small gains for Novo Nordisk, GSK and Merck but after that everything was negative.

Nike was a feature among the consumer discretionary names, sinking 17% after reporting a build-up of inventories, higher freight costs and adverse foreign exchange effects - that strong US dollar makes exporting harder for US companies, it will be interesting to see how widespread this is as we enter the US reporting season (the opposite of the effect for UK exporting companies).  But other names in the sector were worse, Tesla fell by 27%, Ford by 20% and Volkswagen by 17% despite the successful flotation of Porsche.

Among the technology sectors, Meta Platforms (Facebook) continued their dreadful year down a further 13% and a poor period for the ‘chip’ manufacturers saw Intel sink 13% and Nvidia by 10% and Taiwan Semiconductor by 17%.  Among the majors, Apple and Microsoft both slipped by around 7% while Alphabet was off 4%.  In the financials, the banks turned sharply lower again with Credit Suisse in the spotlight again and their shares sinking to an all-time low.   

The markets remain in thrall to the inflation data and the extent of the squeeze to be applied by the Fed.  Prices are moving to attractive levels and there would appear to be universal negativity but, for the present, it remains hard to see what turns sentiment.  

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