ACPI Product Team Special Commentary Q3


Fed’s Tapering Coming Soon & China’s Real Estate Woes

     September Quarter 2021 — October 1st, 2021

  • As widely anticipated, the Federal Open Market Committee (FOMC) keeps policy rates on-hold and its asset purchase program unchanged (for now) as it moved closer to tapering and appeared willing to hike policy rates earlier than before. “if progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.” This signals a formal tapering announcement could come in November. (Link)
  • On September 30th, the US Congress passed a continuing resolution (CR) that funds the federal government until December 3rd. The CR avoided an immediate government shutdown starting October 1st, but the jury is still out when it comes to fiscal deadlines in Washington.
  • The US August core Personal Consumption Expenditures (PCE) inflation increased by 0.3% on a month-over-month basis (mom) and 3.6% on a year-over-year basis (yoy), the highest in three decades. Headline PCE increased by 0.4% (mom) and 4.3% (yoy). Personal spending in August rebounded from a July dip, suggesting that the overhang of Delta resurgence may be behind us.
  • The potential for a default of China’s biggest developer Evergrande’s $300 billion debt attracted the global market’s attention in September. With actual default increasingly likely, investors are becoming concerned about the implications for growth and potential spillover effects.
Index Performance Q3/21 Return


YTD Return 10/01/2021
TSX -1.0% +15.6%
Dow -1.9% +12.2%
S&P 500 +0.2% +16.0%
NASDAQ -0.4% +13.0%
Russell 2000 (Small-cap) -4.7% +13.5%
US 10-year Treasury yield 1.49% (+2 bps) +55 bps
Canada’s 10-year GoC yield 1.51% (+12 bps) +79 bps
US Dollar Index (DXY) 94.2 (+1.9%) +4.6%
WTI US$/bbl $75.1 (+2.3%) +56.1%
Gold US$/oz $1,757 (-0.7%) -7.3%
VIX (30 day) 23.1 (+46.2%) -7%
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