The Cambridge Weekly – 14th November 2022

Signs of ‘peak inflation’ emboldens markets

There were three big market-moving stories last week: the US midterm elections, the latest crash in the surreal world of crypto currencies, and the release of US inflation data for October. By last Friday, it was the lower-than-expected inflation data that dominated in terms of market activity. Last Thursday’s report from the Bureau of Labor Statistics revealed annual consumer price index (CPI) inflation slowed to 7.7% in October, below the 8% expected by most economists, and the lowest level since January.

Republican ‘red wave’ ends up as merely a ripple

Americans went to the polls last week, for what some political commentators labelled the most important midterm elections in recent memory. Investors might feel differently – as direct market impacts are often small and hard to evaluate. The policy makeup of the world’s largest economy is nonetheless a crucial factor in any investment outlook. This is especially so given the current state of US and world economies – with rising interest rates, tight labour conditions and sky-high inflation. These factors are heavily impacted by fiscal and foreign policy, giving Washington’s lawmakers a key role.