8th November 2021
The Cambridge Weekly – 8 November 2021
No tantrum over this taper
October’s positivity across global stock markets spilled over into the first week of November. That is with the exception of China, which appears to be increasingly isolating itself from the rest of the world. Not only was its leader very notably absent from the COP26 climate summit in Glasgow, but it is also choosing to let international bondholders bear the brunt of the ongoing financial woes of its property developers. No wonder then, that Chinese stocks have fallen thoroughly out of favour with investors this year.
COP26: Good COP, bad COP
The 26th meeting of the United Nation’s uninspiringly-named Conference of the Parties (COP26) began last Sunday. Speeches on the threat of catastrophic climate change were perhaps fitting of the Halloween kick-off. With a week of deliberations and announcements still to come, politicians have already made plenty of promises to aid the urgently-needed global green transition. Policymakers have set or reemphasised targets to phase out fossil fuels – particularly coal – as well as introducing mechanisms to prevent those who might bend the rules.
Central bank bait-and-switch
The trick is to always keep them guessing, you see. It works in entertainment, sport and – apparently – now monetary policy. That was what we learned last week from the BoE, whose policymakers kept interest rates on hold despite all signals to the contrary. If the intention was to catch markets off-guard, the plan worked perfectly. Sterling fell 1.2% last Thursday and short-term government bonds rallied, as investor expectations of tighter conditions in the UK were proven wrong.