Market developments
Equities: Global equity markets experienced a volatile week, marked by a defensive shift in sentiment. Initially, markets were boosted by the resolution of the government shutdown, but this optimism faded. A tech sell-off, driven by concerns over high valuations and potential overinvestment in AI, led to a sharp reversal, particularly in the U.S. Overall, the week was characterized by a “repricing phase” as markets adjusted to fading expectations of near-term Federal Reserve rate cuts and reassessed technology valuations.
Fixed Income: Global bond markets were mixed as investors balanced policy uncertainty with heavy supply and risk-off sentiment. U.S. Treasury yields edged higher early in the week. 10-year yields hovered near 4.10%, while the curve steepened slightly as long-end rates rose more than short maturities, before easing later amid hopes of a resolution to the prolonged government shutdown. Global aggregate indices were roughly flat, while emerging market debt saw mild gains supported by softer dollar moves.
Commodities: Commodities posted a strong week overall, led by precious metals and industrial metals, while energy was mixed, extending their year-to-date leadership as investors sought safe havens amid equity volatility.