November Market Commentary 2023

13 Dec 2023 | Investment Updates
November Market Commentary 2023

Markets staged a strong recovery in November, with the “Santa rally” coming early this year. The MSCI All-Country World Index was up 8% in November alone, driven by positive economic data, inflation falling below expectations, signals from Central Banks that interest rates are likely at their peak, and economies in developed markets cooling off but not slowing enough to cause recession. November was the best month for world equity markets since vaccines for COVID-19 were announced in late 2020.

This month, we have much less focus on the US than usual. The data is improving and driving stocks to strong performance in November and for the year as a whole. It is a similar story in the UK and Europe, so we only briefly look at these regions. China has had a sluggish month with declining economic activity but no major headlines to focus on. Instead, we look at the world of tech bros and crypto as major legal cases go against two of the world’s largest (or former largest) crypto exchanges and their CEOs, and a former hyped-up business faces bankruptcy.

Lastly, we have a deep dive into Japan and its Yield Curve Control Policy. Japan has been mentioned briefly in several of our market updates, and it’s time for us to take a much closer look at the only country in the world to still maintain negative interest rates. Thanks to our partners at VAM Funds, we have an excellent insight into the Bank of Japan’s somewhat controversial policy.



The Fed kept interest rates unchanged in the 5.25% – 5.5% range, which is still a 22-year high. US annual inflation was only 3.2% in October, the lowest level for two years, with no price rises month-on-month from September. Core inflation also fell to 4%. Job and wage growth also cool, raising hopes that the economy could avoid a recession. The US economy, in fact, grew by 5.2% in Q3, above estimates of 4.9% and at the fastest pace for two years.

President Biden met with Chinese President Xi Jinping in an attempt to improve communication between the two superpowers.



The Bank of England left interest rates unchanged at 5.25% and reiterated its stance that there would be no rate cuts any time soon. Governor Andrew Bailey said that inflation is still too high, and the Bank cautioned that no meaningful economic growth was expected in the coming years, with the economy being close to a recession.

UK inflation fell to 4.6% in October, lower than expected and its lowest rise in two years. This was also the most significant fall in annual CPI from one month to the next in over 30 years. Despite this, inflation in the UK remains higher than in other developed economies. Behind the data, falling energy prices have driven a large portion of the decrease. However, consumers will not see much difference in their pockets as energy subsidies paid last year by the government are no longer in place.

Chancellor Jeremy Hunt announced National Insurance cuts and a “super-deduction” for business investment as part of his Autumn Statement. This follows the Office for Budget Responsibility predicting borrowing to be £27 billion lower in 2027/28 than previously thought in March’s estimates. The OBR also said that the economy is 3% larger than previously expected in March and cancelled its expectations of a recession. On the flipside, they also revised downwards forecast growth numbers.



Eurozone annual inflation was just 2.9% in October, down from 4.3% in September. This was the lowest inflation rate for two years, although the Eurozone economy is still struggling as it contracted 0.1% in the third quarter. Unemployment in Germany hit a two-year high of 5.8%.

November data then showed inflation had come down even further to 2.4% as energy prices continued to see significant falls.

Many people now believe that the ECB’s rate hiking cycle is done now that inflation is close to target.


A Bad Month for Tech Bros

Sam Bankman-Fried was convicted of defrauding customers of his failed cryptocurrency exchange FTX. The company went from a $32 billion valuation to bankruptcy last year after customer funds were misappropriated and $8 billion worth of deposits went missing.

The CEO of another major cryptocurrency exchange, Binance, also found himself in hot water with the authorities. Changpeng Zhao (aka CZ) pleaded guilty to charges of money laundering after the US Justice Department found Binance to have facilitated hundreds of millions of dollars worth of transactions between users in the US, Syria, Iran, and Russian-occupied Ukrainian regions of Crimea, Donetsk, and Luhansk. Further evidence presented that transfers of Bitcoin were made from Russian darknet marketplaces. Binance was ordered to pay $4.3 billion in penalties, and Zhao will personally pay $50 million in fines.

Despite this further showing the dark side of cryptocurrencies and their widespread use in illegal activities, Bitcoin rose to a 20-month high of $42,000.

One tech bro who got out with his millions before his company failed was Adam Neumann. After investors valued his WeWork company (a co-working space business, i.e., real estate) like a tech company, its former $4 billion valuation has plummeted following reports that it could file for bankruptcy.


Japan – The Yield Curve Control Policy

There has been a lot of talk about the Yield Curve Control Policy that has been in place by the Bank of Japan for many years, with economists and investors watching closely for any changes. Japan is the only country in the world to currently have negative interest rates, despite inflation remaining above the BoJ’s 2% target – it rose to 2.9% year-on-year in October. The Japanese economy also shrank by 2.1% year-on-year in Q3, suggesting that high inflation is having an impact on customer demand. Many investors are looking for a policy change from the BoJ, but a shrinking economy will make changes difficult to implement.

A new governor for the BoJ brought in earlier this year has also accelerated expectations of a policy shift, although big changes do not tend to happen quickly in Japan. The below is taken from VAM Fund’s 3rd November weekly commentary and gives an excellent overview of the current situation.

“The Bank of Japan (BoJ) has employed Yield Curve Control (YCC) as a means to achieve its economic objectives. YCC is typically used to control inflation, promote economic growth and manage interest rates in the financial system. A Central Bank can implement YCC by impacting supply and demand through buying or selling government bonds at a particular tenure to ensure the market interest rate aligns with the Central Bank’s target. This week, the BoJ made another adjustment to its YCC policy, bringing the Japanese Central Bank a step closer to phasing out the policy that’s been in place for almost a decade. Before July this year, the BoJ had a fixed ceiling of 0.5% on the yield of 10-year bonds, which they then decided to increase to 1%. They have now redefined it as a loose upper bound rather than a hard cap.



In the past, the YCC policy has come at a cost to the country, causing distortions in financial markets, as well as an undesirable drop in the value of its currency. By relaxing the control over the 1% ceiling, long-term borrowing rates will be allowed to increase to levels that were previously considered off-limits. This will motivate banks to lend more money and encourage businesses to invest more in the economy, ultimately leading to economic growth.

Whilst other major economies have sharply increased interest rates over the past year to control inflation, Japan has stood apart by maintaining a target policy, or short-term rate of -0.1%, making it the only country in the world with a negative interest rate. At the same time, inflation has remained above the BoJ’s 2% target, and ongoing cost-related pressures (primarily driven by oil prices) have led the BoJ to anticipate even higher inflation in 2024. With the combination of increasing inflation and the impact of a weaker currency, it appears ever likely that this will mark the end of negative interest rates for Japan in the new year.



  • BlackRock Investment Institute
  • atomos, via VAM Funds
  • Fidelity International
  • RBC Brewin Dolphin, via Guinness Asset Management
  • BBC News
  • Reuters