There is a long way to go before investors can declare victory over inflation, but market performance last week shows just how negative an influence inflation has had on markets and the recovery potential for portfolios once inflation abates, says the RBC Harbour Group. Investors finally got a break on inflation last week, as the October reading was lower than economists’ expectations. This sparked the largest rally in stocks and bonds since the depths of the COVID crisis. The S&P 500 gained 5.5 per cent, the largest move since the extreme COVID volatility of April 2020. The last similar gain was in the waning days of the global financial crisis in 2009. However, it says one day does not make a trend, but every trend starts with one day. As well, it called this the latest example of how difficult it is to consistently time the markets.
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