Equity markets outperformed bonds over the third quarter on the back of falling oil prices and the Federal Reserve's decision to halt its interest rate tightening campaign. Global bond markets in the US also rallied, lowering bond yields. In the US, the equity market reached a five year-high, driven by the Fed's decision to stop raising rates and the sharp decline in oil and commodity prices which eased inflation expectations.The equity market rallied despite concerns that the slowing US housing market could lead to a sharp fall in consumer spending. European equities also rose on the expectation that earnings will continue to grow and the region will see an increasing number of merger and acquisitions. With inflation, still above the European Central Bank's target, it opted to raise rates to 3.00% over the quarter. Shares in the UK were also supported by ongoing M&A activity while inflation concerns led the Bank of England to raise rates to 4.75%. Furthermore, Japanese equity markets fell amid concerns about slowing US economic growth. Japan ended its 0% interest rate policy and took rates to 0.25%, its first increase in nearly six years.
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