INVESTMENT REVIEW - MARKETS TAKE FRIGHT AGAIN
The prospect of the Federal Reserve slowing its asset purchases,
combined with the threat of military action in Syria, hung heavily
over financial markets in August. Oil prices were sent up and both
bond and equity prices down, most notably in emerging markets,
overshadowing the encouraging signs of economic recovery in the UK
and Europe.
US
After reaching new highs in July, US equity markets have pulled
back in recent weeks as the prospect of Fed 'tapering'
edges towards reality. The yield on Treasuries, probably the single
most important price in global financial markets, continues to rise
in anticipation of an imminent change in monetary policy. That in
turn has helped to send the dollar higher and the currencies of
weaker economies in the opposite direction. Capital has flowed
steadily out of many emerging markets, especially those with large
current account deficits. A key question for investors is
