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Archinomics Monthly - September 2021

3 months ago



Global stock markets were spooked by the prospect of a reduction in pandemic-era stimulus during September, with most major markets finishing the month lower. Concerns over persistent inflation and slowing economic growth also put downward pressure on the markets. In the US, the S&P 500 fell 4.8%, while the tech-heavy Nasdaq was 5.3% lower. In Europe, the Euro Stoxx 50 shed 3.5%. Most Asian and emerging markets didn’t fare any better, and the MSCI Emerging Markets index lost 4.2% over the month. The outlier was Japan, which gained 3.5%.


September was a tough month for government bonds. The US 10-year Treasury yield continued to rise (and prices fell). The yield hit its highest level since June during the month, as investors reacted to news that growing numbers of Federal Reserve policymakers expect an interest rate rise in 2022. In corporate bond markets, investment grade corporate bonds were lower in the US and Europe, while high yield bonds were relatively flat in both regions.


September was a good month for the US dollar, as investors banked on persistent inflation leading to interest rate hikes in the US. The US Dollar Index, which tracks the currency against a handful of its global peers, hit its highest level since September 2020. The euro had a mixed month, rising against sterling but falling against the dollar and the yen. Meanwhile, sterling lost ground against its major counterparts over fears of an economic slowdown.


September was a strong month for oil. Brent Crude rose 7.8% to finish at $78 per barrel, after touching a three-year high during the month. The oil price was pushed higher by strong demand forecasts from OPEC, alongside reduced output from the US. Iron ore endured a bad month, after falling 20% in a single week. The commodity reacted badly as Chinese steel mills sold off their iron ore holdings in response to government production curbs. Elsewhere, gold lost 3.1% over the month to finish at $1,757 per ounce.

Market Volatility

Market volatility

Stock market volatility (measured by the VIX Index) shot up in September, as markets reacted to the prospect of tightening monetary policy from global central banks. The VIX finished the month at 23, more than 40% higher than its reading at the end of August.

Responsible investing

New York Climate Week was held on 20-26 September. The event brought together business owners, investors, respresentatives from the scientific community and world leaders to engage on the increasingly urgent topic of climate change. There were discussions around 10 themes including energy, food, nature and government policies, all with the aim of increasing awareness and assessing progress in this area ahead of COP26 in November.


Evergrande, the Chinese property giant, became the most high profile casualty of recent regulatory reforms. The world’s most endebted property company approached a crisis point as interest payments to foreign creditors were missed.

Major central banks hinted that policy tightening might not be far off. The Bank of England joined a number of US Federal Reserve governors in suggesting that interest rates could rise in 2022, while the Bank of Norway became the first G10 central bank to raise rates.

Financial markets were unsettled by the prospect of stagflation. As energy prices soared and inflation rates remained stubbornly high, early PMI data suggested economic growth had been hit by supply chain bottlenecks and the continuing spread of the Delta variant.


on the

Financial markets will watch the unwinding of the Evergrande crisis closely, on the alert for signs of contagion. A policy response from the Chinese authorities is likely, given the great importance of the property sector to China’s economy.

Government representatives and corporate leaders will continue a series of discussions ahead of the UN’s COP26 Climate Change Conference in Glasgow. A confirming of national pathways towards the target of net zero emissions by 2050 can be expected. 

Following the inconclusive General Election in Germany, horsetrading among the most successful political parties will continue in order to form a government.  A coalition, possibly to include the Green Party, could take several months to achieve.

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