September, according to Virginia Woolf, is the perfect month. Those tired of thin summer trading, the slowdown in dealmaking and the waiting for Fed taper hints, might agree.
Summer wasn’t too bad for investors. U.S. and European stocks rose 7% and 6% respectively between June and August, 10-year U.S. and German bond yields fell around 30 basis points and the dollar rose 3.5% against a basket of rivals.
Negatives included a 9% fall in Chinese shares after a regulatory crackdown, and a rapidly spreading Delta variant of COVID-19 that has taken daily reported infections globally above 700,000 (versus around 400,000 in early-June).
So what will September bring? First, potential reactions to Jerome Powell’s Jackson Hole speech. Both the Fed and the ECB meet, while Norway may become the first major central bank to hike rates. Both Canada and Germany meanwhile hold elections. Got that back to school feeling yet?