The month was marked by the extraordinary lengths policy makers across the globe were forced to go to in order to kick start circulation of money in the financial markets. Central banks including the US Fed Reserve, Bank of England, Bank of Japan and People’s Bank of China hacked interest rates and more cut were factored in by futures markets from the central banks. The US government started setting in motion the $700 billion plan earmarked to pull the US banking sector out of a hole. Large ‘bailout’ plans and nationalisation of banks was carried out in other nations as well.

The unprecedented size of policy actions appeared to have started helping market sentiment towards the end of the month – though most market segments registered the biggest monthly losses ever, nearly all asset classes registered a weekly gain in the last week of October. LIBOR rates eased and commercial paper activity in the US also reflected easing conditions in the credit markets.

During the month, risk-aversion reigned across market segments, resulting in October ending as one of the worst months ever for several assets classes including safer havens like gold. Gold lost 18% in the month – the most since 1983. Benchmark crude found support around $60/bbl after shedding a third of its price.

The rush for safer assets did not help classic safe havens like gold because investors having faced high losses looked to hold cash. Other assets that took advantage of the scenario were US bonds, the dollar and the yen. Yield on 30-year US Treasury bond hit the lowest level ever, below 4% and risk perception for corporate junk bonds hit the highest seen in five years as per some estimates.

Spreads on certain emerging market bonds over US Treasurys rose to 6-year highs as it became clear that emerging markets could not escape the recessionary winds spreading the developed markets. Emerging stock market indices lost more than a fourth in value, the worst month since 1998.

Nikkei hit a 26-years low while US Dow Jones index had the most number of daily losses in the month since 1973. S&P 500 index had the most volatile month since November 1929.

The dollar rallied more than 10.7% against Euro and over 13.91% against Canadian dollar and 15.7% against Australian dollar among other currencies.

Regards,