WHAT MOVED THE MARKET THE BIGGEST STORIES THAT MATTERED FOR THE MARKET LAST MONTH...
September 24 German elections reshape parliament. German Chancellor Angela Merkel saw her party's support erode, winning only 33% of the overall vote. This was down from the 41% won in the 2013 election. Alternative for Germany, considered a far-right group, won almost 13% of the vote and will enter parliament for the first time. This was the worst result for Chancellor Merkel's party since 1949, and they must form a new government coalition to maintain majority control of parliament. October 1-15 Catalonian independence referendum and Austrian elections create tension in Europe. On October 1, the Spanish region of Catalonia held an independence referendum where voters decided in favor of separation from Spain. The Spanish national government declared this vote illegal, and the ensuing back-and-forth between the regional parliament and national prime minister created concerns around harmony in the eurozone. Compounding the problem was the election of far-right candidate Sebastian Kurz in Austria, highlighting more potential discord.
October 12-15 The IMF andWorld Bank held their annual meetings inWashington, D.C. The event featured speeches by many key global central bankers, including Federal Reserve chair Janet Yellen and European Central Bank (ECB) president Mario Draghi. The meetings were kick-started by the International Monetary Fund (IMF) raising its global growth expectations for this year and next. Central bankers from both Europe and the U.S. followed the IMF's lead by also talking up the global growth picture. Fed Chair speculation heats up. Throughout the month, the market and media tried to decipher who will be the next head of the Federal Reserve when Janet Yellen's term ends on February 3. Press reports had whittled the list of potential candidates to Stanford economist John Taylor, Fed governor Jerome Powell, former Fed governor Kevin Warsh, Yellen, and White House economic adviser Gary Cohn. Three of the candidates are viewed as more hawkish than Yellen, implying rates may head higher. In Summary... The market roared to new highs. The reflation "trade" enticed investors to buy financials, industrials, and technology stocks, and there were encouraging economic developments throughout the month.
EDITORS
Scott Garliss
John Gillin Greg Diamond
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16 | October 2017
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