Investors were concerned that the collapse of the second-largest property developer in China, Evergrande, may have started a ‘contagion’ leading to another Global Financial Crisis. However, the Chinese government quickly responded by offering a restructuring plan, along with a capital injection into the Chinese banking system leading markets to recover.

Tapering and jobs data

Outside of Evergrande, this month saw the Federal Reserve hold a two-day policy meeting. The outcome of the meeting concluded what many expected, policymakers declare they would soon consider tapering the central bank’s purchases of Treasuries and mortgage-backed securities which led to investors react through selling long-dated bonds pushing down the price.

As bond prices share an inverse relationship with bond yield, when one goes down the other rises, long-dated bond yields rose.

The selloff of long-dated government bonds quickly slowed down, helping bond prices to stabilise.

The chair of the Federal Reserve, Jerome Powell, stated he would be looking for continued signs of improvement in the labour market before acting, although a “knockout” report for September was not required for a tapering of central bank’s purchasing.

Consumer confidence

September saw US consumer confidence index fall 5.9 pts to 109.3, as consumers slightly pull back on spending following a quicker than anticipated recovery in US consumer confidence throughout 2021.

The figures suggest the spread of the delta variant and concerns regarding inflation continue to impact consumers’ spending on services and suggest consumers’ short-term outlook looks less positive than expected.