Equity markets: strong rise in stock prices
The disinflationary theme set the tone for markets in November. Investors do not agree with central banks that interest rates will remain at this high level for a long time. In any case, the latest inflation figures published on both sides of the Atlantic seem to be moving in investors' direction. In Europe, interest rate sensitive sectors such as real estate and technology performed best as investors focused on the timing of interest rate cuts.
Bond markets: an exceptional month for bonds
Yields across the yield curve fell sharply in November. Investors ignored the acceleration of the US economy in the 3rd quarter (5.2% annualized) and focused more on downward inflation. In October, the Fed's preferred measure of inflation fell to its lowest level since March 2021. Other factors reinforced the disinflation story. For example, U.S. labor market data also pointed to easing. Job growth continued to slow in October and the number of people on unemployment benefits rose. The story was similar in the euro zone.
Central banks: some Fed members begin to change their rhetoric
The Fed meeting on November 1st ended with no change in monetary policy. Chairman Powell advocated the status quo in terms of messages, stating that the Fed was not thinking of rate cuts for the time being and that there was still a long way to go to meet the 2% inflation target. Since that meeting, however, market expectations about the future path of key interest rates have changed significantly. Markets now hold a near 0% chance of a Fed rate hike in December, while expectations for interest rate cuts in 2024 have increased.
Foreign exchange: devaluation of the dollar
The dollar (DXY index) fell 3% in November following the release of weaker-than-expected inflation data in the United States. After reaching 1.10 against the euro, the dollar strengthened slightly against the euro at the end of the month. The reason: inflation figures in the euro zone fell far short of expectations.
Commodities: new OPEC production cut
Oil prices weakened when OPEC+ decided to postpone for several days its meeting scheduled for Nov. 26 due to a lack of agreement on production quotas for certain African countries. In the end, the cartel decided to maintain production cuts but also to increase them by a million barrels a day, causing oil prices to rise in late November. However, the increase at the end of the month did not allow oil prices to erase their losses for the month.