Garton Global | Monthly Market Digest
Markets remained cautious in September as political risk returned to the fore and rate cut expectations dominated sentiment. The pound weakened amid Labour infighting and record gilt yields, while the dollar strengthened on resilient US growth despite renewed pressure on the Fed from Donald Trump. Looking ahead, UK fiscal credibility, US shutdown risks, and diverging global growth paths are set to drive volatility across major currencies.
Check your positioning and speak to the Garton Global team today.
LAST MONTH: SEPTEMBER
🇬🇧 🇺🇸 Political Risk Returned to Centre Stage
Sterling and gilts came under pressure after Andy Burnham signalled a possible challenge to Keir Starmer.
In the US, Donald Trump’s attacks on the Fed and DOJ reignited concerns over governance and the rule of law.
UK assets reflected the uncertainty, with the pound and gilts pressured.
US governance worries added to a more defensive backdrop.
🇺🇸🇬🇧 Rate Cut Bets Rose
US rate cut expectations jumped after Non-Farm Payrolls undershot forecasts.
Traders brought a larger September Fed cut into play.
In the UK, dovish Bank of England commentary pointed to further easing despite elevated inflation.
Markets shifted toward looser policy across both sides of the Atlantic.
🇺🇸 Dollar Strengthened on Upbeat Data
The dollar firmed as Q2 GDP was revised up to 3.8% and durable goods orders rebounded.
Solid US growth overshadowed the political noise.
Investors favoured US assets on relative strength.
GBP and EUR slipped as capital rotated toward the US.
THIS MONTH: OCTOBER
🇬🇧🇺🇸🇪🇺 Politics and Fiscal Risk
UK fiscal credibility faces pressure as Labour rifts and OBR forecasts test confidence ahead of the Budget.
In the US, the shutdown and Trump-era volatility will sway risk appetite and bond markets.
French instability continues to cap euro upside.
🇺🇸🇬🇧🇪🇺 Central Bank Rate Path Uncertainty
Markets remain split on the pace of Fed and BoE cuts as US data softens.
The ECB stays cautious, with inflation easing but direction unclear.
Key prints, US CPI, NFP, and UK wages will guide Q4 expectations.
🛡️ Safe Havens and Diverging Growth
Slowing growth, high debt, and geopolitical risks are fuelling demand for gold and Treasuries.
The dollar may gain on safe-haven flows but face limits if US data weakens.
Watch for equity and credit rebalancing if sentiment turns.
Have a great month,
The Garton Team.