Global equity markets lost ground in October. Investors were concerned about rising long-term U.S. Treasury yields, stronger-than-expected economic data—which reignited worries that the U.S. Federal Reserve (Fed) would resume its rate-hiking cycle—as well as growing geopolitical tensions in the Middle East. Developed markets outperformed their emerging-market counterparts for the month.

North America experienced comparatively smaller losses and was the strongest performer among developed markets in October, led by the U.S. The Pacific region was the most notable market laggard due mainly to weakness in New Zealand and Japan. Eastern Europe posted a double-digit gain and was the top-performing region within the emerging markets during the month due primarily to strength in Poland. In contrast, the Gulf Cooperation Council (GCC) countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—and Latin America recorded the largest losses among the emerging markets during the month.

Most global fixed-income asset classes lost ground in October. U.S. Treasury securities saw relatively smaller losses and were the top performers within the U.S. market for the month. U.S. mortgage-backed securities (MBS) and corporate bonds were the most notable market laggards. Treasury yields moved higher for all maturities greater than one year, particularly in the intermediate and long segments of the curve. Yields on 2-, 3-, 5- and 10-year Treasury notes rose 0.04%, 0.10%, and 0.29%, respectively, over the month. The spread between 10- and 2-year notes moved from –0.44% to –0.19% during the month, and the yield curve remained inverted.

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