Global equity markets rallied sharply in November. Signs of slowing inflation spurred investors’ hopes that the Fed won’t need to raise interest rates further and that the economy could be primed for a “soft landing,” in which growth and inflation slow but the economy does not enter a recession. Developed markets outperformed their emerging-market counterparts for the month. 

The Nordic countries were the strongest performers among developed markets in November, led by Sweden. The Pacific ex Japan region was the primary market laggard due mainly to underperformance in Singapore and Hong Kong. Latin America posted a double-digit gain and was the top-performing region within the emerging markets during the month due primarily to strength in Brazil. In contrast, the Gulf Cooperation Council (GCC) countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—saw a less significant upturn and comprised the weakest-performing emerging-market region during the month.¹

Global fixed-income assets garnered positive returns in November. Corporate bonds were the top performers within the U.S. market for the month, while U.S. Treasury securities saw relatively smaller gains and were the top performers within the U.S. market for the month^.2 Treasury yields moved lower for all maturities of three months or longer. Yields on 2-, 3-, 5- and 10-year Treasury notes decreased 0.34%, 0.42%, and 0.51%, respectively, over the month. The spread between 10- and 2-year notes moved from –0.19% to –0.36% during the month, further inverting the yield curve. 

The minutes of the Fed’s 31 October-1 November meeting indicated that the central bank most likely will maintain the federal-funds rate at the current range of 5.25% to 5.50% in the near term. The Federal Open Market Committee (FOMC) meeting participants agreed that they were ”in a position to proceed carefully and that policy decisions at every meeting would continue to be based on the totality of incoming information and its implications for the economic outlook as well as the balance of risks.” However, the FOMC members acknowledged that “further tightening of monetary policy would be appropriate if incoming information indicated that progress toward the Committee’s inflation objective was insufficient.” The FOMC also noted that “data arriving in coming months would help clarify the extent to which the disinflation process was continuing, aggregate demand was moderating in the face of tighter financial and credit conditions, and labor markets were reaching a better balance between demand and supply.” 

On the geopolitical front, a one-week ceasefire in the military conflict between Israel and Hamas expired on 30 November after the two sides could not reach an agreement on an extension. The truce had led to several hostage and prisoner exchanges between Israel and Hamas. Each side blamed the other for the failure to extend the ceasefire, and fighting resumed following the expiration of the truce. Elsewhere, President Joe Biden and China’s President Xi Jinping met in California on 15 November. The leaders of the world’s two largest economies³ agreed to resume military communications in an effort to improve relations between the countries amid speculation about China’s intention to invade Taiwan, as well as the Xi administration’s support of Russia in its ongoing conflict with Ukraine. At a news conference following the meeting, Biden noted that he and Xi had agreed that if there were concerns about “anything between our nations, or happening in our region, we should pick up the phone and call.” 

Global commodity prices generally declined in November.⁴ The West Texas Intermediate (WTI) and Brent crude oil prices fell 6.2% and 4.9%, respectively, due to a significant increase in production in the U.S. and weakening global demand, particularly from China. The New York Mercantile Exchange (NYMEX) natural gas price tumbled 27% over the month due to an increase in inventories and forecasts for above-average winter temperatures in the U.S. The gold spot price rose 3.2% in November, bolstered by a decline in U.S. Treasury yields, as well as higher demand spurred by investors’ hopes that the Fed may begin to ease monetary policy sooner than previously anticipated. Wheat prices were up 7.5% in November attributable to a reduction in exports from Ukraine, as well as a delayed harvest in France due to above-average rainfall.⁵

Economic data

 U.S. 

The Department of Labor reported that the U.S. consumer-price index (CPI) was flat in October after rising 0.4% in September. The CPI advanced at a lower-than-expected rate of 3.2% compared to the same period a year earlier—down sharply from the 3.7% annual rise in September. Core inflation, as measured by the CPI for all items less food and energy, posted a 12-month increase of 4.0%—the smallest year-over-year advance since September 2021. Core inflation rose 0.2% in October versus 0.3% during the previous month. Housing costs comprised the bulk of October’s rise in CPI, offsetting lower gasoline prices. Food costs rose 0.3% and 3.3% during the month and over the same period in 2022, respectively. 

According to the second estimate of the Department of Commerce, U.S. gross domestic product (GDP) grew at an annualized rate of 5.2% in the third quarter of 2023, up from the initial estimate of 4.9%, and sharply higher than the 2.1% year-over-year rise in the second quarter. GDP has increased for five consecutive quarters following declines in the first two quarters of 2022. The largest contributors to economic growth in the third quarter were consumer spending, private inventory investment (a measure of the changes in values of inventories from one time period to the next), and exports. These gains offset an increase in imports, which are a subtraction in the calculation of GDP. The government attributed the uptick in the estimate of third-quarter GDP to increases in nonresidential fixed investment and state and local government spending, which were partially offset by a downward revision to consumer spending. The significantly higher GDP growth rate relative to the second quarter was due primarily to increases in consumer spending and private inventory investment, as well as an upturn in exports. Conversely, there was a quarter-over-quarter slowdown in nonresidential fixed investment and a rise in imports.

U.K. 

The Office for National Statistics (ONS) reported that consumer prices in the U.K., as measured by the Consumer Prices Index (CPI), were unchanged in October, down sharply from the 0.5% increase in September. The CPI rose 4.6% year-over-year, significantly lower than the 6.7% annual upturn in September. The largest contributors to the 12-month rise in inflation included alcoholic beverages and tobacco, as well as food and non-alcoholic beverages. These more than offset a decline in prices for electricity, gas and other fuels. Core inflation, which excludes volatile food prices, rose at an annual rate of 5.7% in October, down from the 6.1% year-over-year increase in September.⁶ 

The ONS also announced that U.K. GDP was flat in the third quarter of 2023, following an increase of 0.2% in the second quarter, and rose 0.6% versus the same period in 2022. Production output was unchanged during the quarter, compared to the 1.2% upturn during the previous quarter. The services sector saw an upturn of 0.4% in August, versus a 0.5% decrease during the second quarter. Output in the construction sector ticked up 0.1% in the third quarter, compared to the 0.3% growth rate over the previous three-month period.⁷

Eurozone

Eurostat pegged the inflation rate for the eurozone at 2.4% for the 12-month period ending in November, down from the 2.9% annual increase in October. Prices for food, alcohol and tobacco rose 6.9% in November, but the pace of acceleration slowed from the 7.4% annual rate for the previous month. Costs for services and non-energy industrial goods rose 4.0% and 2.9%, respectively, over the previous 12 months. Conversely, energy prices fell 11.5% year-over-year, following an 11.1% decline in October. Core inflation, which excludes volatile energy and food prices, rose at an annual rate of 3.6% in November, down 0.6 percentage point from the previous month.⁸

According to Eurostat’s initial estimate, eurozone GDP decreased 0.1% in the third quarter of 2023, a modest downturn from 0.2% growth rate in the second quarter, and posted a slight uptick of 0.1% year-over-year. The economies of Poland and Cyprus were the strongest performers for the third quarter, expanding 1.4% and 1.1%, respectively. GDP for Ireland fell 1.8% and Finland’s economy contracted by 0.9% during the period.⁹

For professional clients only. Not suitable for retail distribution. All references to performance are in US dollar terms unless otherwise noted. See Standardised Performance for more information.

¹ All equity market performance statements are based on the MSCI ACWI Index. 

² According to the ICE BofA U.S. Corporate Index and ICE BofA U.S. Treasury Index.

³ According to the World Bank. 

⁴ According to the Bloomberg Commodity Total Return Index.

⁵  According to market data from The Wall Street Journal

⁶  According to the Office for National Statistics, 15 November 2023. 

⁷  According to the Office for National Statistics, 10 November 2023.

⁸  According to Eurostat. 30 November 2023.

⁹  According to Eurostat. 14 November 2023.

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