August was a tumultuous month for markets. There was panic around yield curve inversions, fears of an escalating US-China trade war and concerns around political crises in countries ranging from the UK to Argentina to Hong Kong. Some markets stabilised towards the end of the month and into September, but not all.
Trump Vs. Fed
The first half of August saw the worst of it. The US yield curve inverted, real 10 US yields turned negative and 30 year US yields fell below 2%. US stocks were down over 6% at one point, though they ended the month down only 1.6%. An intriguing debate also emerged between President Trump and the Fed around who was the cause for the sell-offs – Trump’s escalating trade war or the Fed’s reticence to ease policy dramatically. This will be one to watch for the months ahead…
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