
Events in the US dominated the headlines in October with a 16-day partial government shutdown interrupting economic data flows and unnerving equity markets. However, markets staged a rebound following the resolution of the government shut down and an eleventh-hour deal to negotiate the country’s debt ceiling. Additionally Janet Yellen, well known for her “dovish” policy stance, was nominated as the next Fed Governor and she is expected to replace Ben Bernanke in January 2014. At the October Federal Open Market Committee (FOMC) meeting the Fed decided to leave the pace of asset purchases unchanged stating that it will await further evidence that economic progress has been sustained before adjusting the pace of its current stimulus. The combination of Yellen’s nomination and the interruption of fourth quarter data flow are likely to have increased the prospect of a further delay to the Fed’s policy tapering process.