September 2021 and Third Quarter in Figures

September 30, 2021

The summer quarter of 2021 was a volatile one, as it became increasingly apparent to central bankers, economists and investors alike that because of relentless and deepening supply bottlenecks inflation was rising faster and likely to remain very elevated for considerably longer than had been assumed in the first half of the year. Meanwhile, uncertainties related to the evolution of Covid and to vast political divides persisted, and the quarter ended with an unprecedented likelihood that the United States government would be defaulting on some debt. Long-term interest rates rose sharply in September, and U.S. share prices experienced their worst performance in a year and a half.

Central bank interest rates at the five major central banks monitored in this feature, but that understates the shift in forward guidance during the third quarter. The Fed, ECB, and Bank of England are moving closer to a point when quantitative stimulus will begin winding down, and interest rates did get raised at many other central banks, including increases of 200 basis points in Brazil, 100 bps at central banks in Ukraine, Tajistan, and Peru and lesser amounts by monetary authorities in Mexico, Georgia, Iceland, the Czech Republic, Hungary,Sri Lanka, South Korea and Colombia. In defiance to reality, Turkey’s central bank cut its rate by a full percentage point even through CPI inflation rose there to a 28-month high of 19.25%.

Equity markets suffered September selloffs in many countries, Japan be a notable exception.

The dollar benefited in spite of a considerable erosion of President Biden’s political capital due to the poorly handled exit from Afghanistan, the possibility of a U.S. debt default during the coming quarter, and growing doubts that his fiscal proposals will pass congress. Covid numbers didn’t help, either. It’s hard to believe that back on June 30th that fewer than 300 Americans died from the disease, and lately the daily death count has been hovering around 2000.

The price of WTI oil had slipped in July-August but more than reversed those losses with a 9.5% advance in September. Gold, which often moves inversely with the dollar, dropped 3.3% in September but less than 1% for the quarter.

10-Yr Yield 06/30/21 Chg in Sept 3Q Change
U.S. 1.50% +19 Basis Points +4 Basis Points
Germany -0.20% +19 +1
Japan 0.06% +5 +1
U.K. 1.02% +31 +31
Canada 1.51% +30 +12
Switzerland -0.20% +17 +13
CB Policy Rate 09/30/21 Chg in Sept 3Q Change
Fed funds target 0.00/0.25% 0 Basis Points 0 Basis Points
ECB deposit rate -0.50% 0 0
BOJ policy rate -0.10% 0 0
BOE Bank Rate 0.75% 0 0
Swiss 3M Libor -1.25/-0.25% 0 0
FX 09/30/21 Sept Chg in $ 3Q Chg in $
EUR/USD 1.1859 +2.0% +2.4%
USD/JPY 111.09 +0.5% +0.2%
USD/CHF 0.9251 +1.9% +0.7%
GBP/USD 1.3832 +2.1% +2.6%
AUD/USD 0.7498 +1.2% +3.7%
NZD/USD 0.6989 +2.8% +1.2%
USD/CAD 1.2394 +0.4% +2.2%
USD/CNY 6.4572 -0.2% -0.2%
Equities 09/30/21 Chg in Sept 3Q Change
S&P 500 4308 -4.8% +1.9%
Nasdaq 14449 -3.3% -0.4%
Djia 33844 -4.3% -1.9%
Dax  15262 -3.6% -1.7%
Nikkei 29453 +4.9% +2.3%
Ftse 7086 -0.5% +0.7%
Canada TSE 20070 -2.5% -0.4%
Swiss SMI 11642 -6.2% -2.5%
Commodities 09/30/21 Chg in Sept 3Q Change
Oil, $ per barrel 75.12 +9.7% +1.1%
Gold, $ per ounce 1757.50 -3.3% -0.8%

Copyright Larry Greenberg 2021.  All rights reserved.  No secondary distribution without express permission.



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