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The Long and Short of it, week ending 13 Oct 2023 IT

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Tipo di pubblicazione: Market Commentaries
The Long and Short of it, week ending 13 Oct 2023 IT

Stock prices moved noticeably higher early last week with all 3 major stock indexes gaining north of 1%. The increase came on the back of dovish comments from Fed officials, opining higher longer-term rates would likely make unnecessary additional rate increases. 10-year Treasury rates, reacting to these comments, fell over 25bps through Wednesday. A slightly better-than-expected PPI release (Wednesday), increasing hopes of cooling inflation added to the upward momentum. Sentiment changed, however, following a lukewarm CPI release Thursday, re-igniting higher-rates-for-longer concerns, pushing the 10-year Treasury rate almost 15bps higher and pressuring stock prices lower. That pressure continued through Friday with risk-off sentiment dominating markets on growing concerns surrounding Israel’s counteroffensive against Hamas terror attacks. The Nasdaq Composite and S&P 500 Indexes moved markedly lower while haven asset prices moved sharply higher. For the week, the S&P 500 Index increased 0.4% to 4,327.28, the Nasdaq Composite Index fell 0.2% to 13,407.23, the Dow Jones Industrial Average rose 0.8% to 33,670.29 the 10-year U.S. Treasury rate fell 19bps to 4.62% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) strengthened 0.6%.

European stock markets behaved similarly to U.S. markets but with better performance. Both the STOXX 600 and FTSE 100 Indexes moved markedly higher through Tuesday (initially shrugging off the volatile situation in the MidEast), benefiting from dovish ECB and Fed officials’ comments, lower bond yields and, for the FTSE 100 Index, a weaker British pound. Noticeably lower UK grocery inflation and slowing consumer spending supported the FTSE 100 Index as well. Thursday’s lukewarm U.S. CPI release seemed to have little effect on stock markets though appeared to move both longer-term German and British yields noticeably higher. As with U.S. markets, risk off sentiment prevailed Friday, precipitated over concerns regarding possible escalation and contagion of the IsraelHamas war, pushing stock prices and the euro and the British pound lower while sharply increasing haven asset prices. For the week, the FTSE 100 Index increased 1.4% to 7,599.60, the STOXX 600 Index rose 1.0% to 449.18, the 10-year Gilt rate fell 19bps to 4.30%, the 10-year Bund rate dropped 16bps to 2.73%, the British pound and the euro weakened 0.8% and 0.7%, respectively, both versus the U.S. dollar.

Top performing ETPs over the week

. 3x Long ETPs 3x Short ETPs
UK +3x BAE Systems (3LBA) +31.2% -3x Barclays (3SBC) +2.2%
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The Long and Short of it, week ending 13 Oct 2023