Market Quote: Israel, Inflation, Income
Author: The editor's desk
October 13, 2023
Members of AGF’s Investment Management Team weigh in on the week that was in global financial markets.
Higher For Longer
“This week’s release of the U.S. inflation rate should put to rest any lingering doubts about interest rates being ‘higher for longer.’ Even though the pace of price increases in the United States continued to fall in September, they are still rising at an annual clip of 3.7%, which remains well above the U.S. Federal Reserve’s 2% target. When this fact is combined with last week’s better-than-expected jobs report, there’s little reason to believe the Fed’s current rate-hiking cycle is at an end. That doesn’t necessarily mean substantially higher rates from here, but it should extinguish expectations of a rate cut happening anytime soon.”
A Dangerous Climate
“The financial markets had a muted reaction this week to the war between Israel and Hamas, yet this is still a very dangerous climate because of the possible involvement of Iran, which, if it were proven, could have a volatile impact on the Persian Gulf and oil prices. Meanwhile, the risk of a U.S. government shutdown on November 17 has not abated, but the Mideast war has persuaded many Republicans in the House to cool their dispute on a budget and a six-month extension is possible.”
Income-ing
“The recent bout of volatility in capital markets has been largely a function of turbulent bond and currency markets, but expectations are growing that it could eventually make its way into riskier asset classes such as credit and equities. In this uncertain environment, high-quality investments that generate regular income may offer investors more certainty than others, especially given the current interest rate backdrop that boasts significantly higher yields than was the case just two years ago. In fact, the recent rise in rate volatility has already opened the door to several new opportunities in credit markets.”
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The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.
Commentary and data sourced from Bloomberg, Reuters and company reports unless otherwise noted. The commentaries contained herein are provided as a general source of information based on information available as of October 12, 2023 and are not intended to be comprehensive investment advice applicable to the circumstances of the individual. Every effort has been made to ensure accuracy in these commentaries at the time of publication, however, accuracy cannot be guaranteed. Market conditions may change and AGF Investments accepts no responsibility for individual investment decisions arising from the use or reliance on the information contained here.
This document may contain forward-looking information that reflects our current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein.
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About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. Our companies deliver excellence in investing in the public and private markets through three business lines: AGF Investments, AGF Capital Partners and AGF Private Wealth.
AGF brings a disciplined approach, focused on incorporating sound, responsible and sustainable corporate practices. The firm’s collective investment expertise, driven by its fundamental, quantitative and private investing capabilities, extends globally to a wide range of clients, from financial advisors and their clients to high-net worth and institutional investors including pension plans, corporate plans, sovereign wealth funds, endowments and foundations.
Headquartered in Toronto, Canada, AGF has investment operations and client servicing teams on the ground in North America and Europe. AGF serves more than 800,000 investors. AGF trades on the Toronto Stock Exchange under the symbol AGF.B.
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