A year ago, investors were asking how quickly interest rates would come down. September answered a different question. Inflation, which was supposed to keep fading, proved stubborn, and oil climbing back above 100 dollars a barrel made it harder still to bring down. With the US economy accelerating on top of that, the central banks that had been cutting rates found themselves raising them again.

The bond market drew the logical conclusion. Persistent inflation erodes the value of fixed payments, and yields returned to levels last seen two decades ago. Equity investors looked at the same economy and chose to focus on growth, particularly the investment boom in artificial intelligence. As a result, the main indices ended the month close to where they started. This is the one economy and two markets of our title.

The calm in equities deserves a closer look, though, because a handful of technology companies tied to that theme carried the indices while most other stocks fell. Whether inflation or growth ends up setting the tone is the question we take with us into the last quarter of the year.

We wish you a pleasant read.