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In the Know – September 27, 2022


Overseas news

US stocks slid deeper into bear market territory, with the S&P 500 and the Dow closing lower. This came as investors worried that aggressive campaign of the Federal Reserve (the Fed) against inflation could throw the US economy into a sharp downturn.


US Treasury yields rose, with the 10-year rate climbing by as much as 0.21% to reach 3.898%, its highest level since April 2010. The dollar also soared to yet another record high, with the Bloomberg Dollar Spot Index rising 1%.


A bear market is the term for when a securities market or index (usually stocks) falls at least 20% and stays at that level or drops further for a certain duration. It usually causes trouble for investors.


While raising key rates is one of the tools that a central bank has to manage inflation, this may lead to a recession if done too quickly. The acceptable rate and speed of increases vary per economy and according to the conditions.


Risk sentiment was also shaken by dramatic moves in the global market after the pound plunged to a record low and British bond prices collapsed on worries that the new UK government’s fiscal plan threatened to stretch the country’s finances.


The pound is one of the most traded currencies in the world, and so its current value is concerning to foreign exchange investors.


Local developments

The Philippines is having conversations with Russia and other countries to diversify its supply chain for food stuffs and agricultural necessities like fertilizer. It is meant to help with price management.


This came as President Ferdinand Marcos, Jr. noted that the country can’t be complacent in relying on traditional suppliers for such essentials.


The production cost of local food items is a significant factor that contributes to the price levels of related consumer goods. Reducing these costs could possibly lead to lower consumer prices later on.


The International Monetary Fund (IMF) projects the Philippines to grow by 6.5% this year, slightly lower than the 6.7% estimate in July, and to slow to 5% in 2023. It expects the confluence of global shocks to affect the economy in the coming months.


Projections are important because they provide a peek into how experts expect the situation to unfold in the future. While they aren’t always accurate, they usually aren’t very far off.


The lack of positive news isn’t a great sign, but there’s also no reason to believe that things will remain this way for long. For now, avoiding big changes to your investments might be the right thing for your portfolio.

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