the reflexivity between markets and
central banks is starting to resemble
the ancient Greek symbol of a serpent
swallowing its own tail for eternity
markets focus on the timing of a
possible interest rate rise in the u.s.
the committee responsible for setting us
rates is focused on volatility in
markets the postponement of a shift in
US Federal Reserve policy in September
and the decision to leave rates where
they are explains my why money is now
drifting back into riskier assets
economists may still think there's a
good chance of rates rising before the
end of the year but investors put the
odds are less than thirty three percent
the consequence is a rebound in emerging
markets which are turning out to be one
of the best performing assets of October
so far this month the msci index of am
equities is at 9.25 percent while
emerging market equity funds tracked by
epfr global recorded their first
positive inflows last week since June
and the risk premium demanded by
investors for holding emerging market
bonds instead of safer US debt has
dropped but the rebound does not reflect
a sudden improvement in the countries
themselves official data released by
China on Monday showed better than
expected growth of six point nine
percent between july and September but
that marks a slow down compared to last
year and it was enough to drag down
commodity prices on Monday instead it is
the expectation that the US will hold
off raising rates and that other central
banks will be pressurised into following
suit or expanding stimulus programs that
is heading up this rally this week the
european central bank will meet to
discuss whether fresh stimulus is needed
to ward off the threat of deflation in
the eurozone with the latest figures
showing sub-zero inflation in the
eurozone area in September the euro is
reversing its recent rise against the
dollar on the basis that more stimulus
will put downward pressure on the euro
zone's currency all prices for eurozone
bonds are up sending yields lower the
market seems to think that an extension
to Europe's QE program is all but
assured