October 2013 Flash Report

US consumer confidence plunged in October as the threat of a US default during the government shutdown proved an early Halloween scare. Despite rising equity market valuations and the political class’ best efforts to undermine confidence, investor sentiment remains robust. 1.7% US core inflation is below the Fed’s long-term target of 2.0% and showing no signs of acceleration while real wages are up nearly 1% from this time last year, their largest gain in four years. The latest Fed minutes confirmed that monetary policy in the US will remain accommodative; market participants now expect tapering to begin in early 2014 and quantitative easing to end by late 2014.

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