Global equities rallied strongly to open the month of October. This was a strong rebound rally, as US Bond Yields settled lower and the US was sold off. The EUR rallied towards 0.9800, while the GBP spiked to 1.1270, following the removal and revision of the tax cut policy from the Mini-Budget. Truss and her Chancellor came under extreme pressure from the Tory Party to remove the unfunded tax cuts from the budget. Is this enough for her to survive another week?
European Manufacturing PMI was in contraction mode reflecting the parlous state of the economy. Economic conditions have not changed in Europe, with the crippling energy crises and soaring inflation. The UK is in the same boat, but apparently closer to the cliff’s edge. The Japanese Tankan Report was gloomy as manufacturing in Japan feels the impact of massive input cost rises.
Commodity currencies were beneficiaries of the softer reserve, with the NZD jumping to above 0.5700, while the AUD rallied to 0.6500. Extreme market volatility will continue into October.