Market developments
Equities: The S&P 500, Nasdaq and TSX Indices closed slightly higher, supported by positive labour market data that bolstered expectations for a soft landing in the economy. China continued its climb early in the week before closing for the weeklong holiday, set to open back up on October 8th after a nearly 30% rally to end the month.
Fixed income: The two-year U.S. Treasury yield surged this week, reflecting traders’ reassessment of the Federal Reserve’s potential rate cuts considering the robust job figures. However, not all experts share this optimism, some cautioned that the Fed’s battle against inflation is far from over, emphasizing that the labour market’s strength late in the economic cycle could complicate monetary policy decisions.
Commodities: Oil prices surged this week. The increase is largely attributed to escalating tensions in the Middle East, particularly following President Biden’s comments regarding U.S. discussions on possible Israeli strikes against Iranian oil facilities after Iran’s missile attack on Israel earlier in the week. Despite these tensions, some analysts suggest that the market is not reacting as strongly as expected due to several factors. OPEC’s spare production capacity and the recent reopening of oilfields in Libya are seen as stabilizing influences on global supply.