Risk assets made further progress in October, with equities leading the way. Wall Street gained 2.1% and reached a new all-time high, but, as in September, the best returns came outside the US: Japan was up by 5%, Asia ex-Japan by 4.5% and emerging markets by 4.2%. Among the major markets, only the UK was down (-2.1%) as a strong rally in sterling put pressure on the big overseas earners, which dominate the UK stock market. The improved appetite for risk was reflected in bond markets, with safe-haven government bonds flat or down while credit markets produced positive returns, led by US corporate bonds up 0.6%.

After the spike in volatility in August, markets returned to a semblance of stability in September, but this masked some big underlying shifts across and within asset classes. Most notable was a sharp reversal early in the month of bond yields, which until then had trended inexorably lower throughout 2019: the yield on 10 year US Treasuries moved from below 1.5% at the beginning of the month to 1.9% within a matter of days. Somewhat more positive economic data and an apparent thawing of trade war rhetoric between the US and China proved to be the trigger for a reversal of some of the big bond moves seen in August, and risk appetite picked up.