After a turbulent summer, September was largely a calm affair for markets according to Deutsche Bank’s Jim Reid. Indeed volatility measures for most assets continued to remain subdued and concerns around the EM issues which haunted markets in August abated. Italy was always going to be the big risk however and it wasn’t until the budget was announced on the second-last trading day of the month that we saw vol return. That said the heavy falls for Italian assets, while also spreading to Europe, were still relatively contained. By the end of the month, 20 of the 38 assets in Deutsche Bank’s sample finished with a positive total return and 21 did so in USD terms.

Going into Friday, BTPs and the FTSE MIB had actually delivered total returns of +3.4% and +6.5% respectively during September however the selloff post the budget announcement meant they finished the month +1.7% and +2.5% respectively. That resulted in heavy falls for most other European bourses too on Friday which pared what had been reasonable monthly returns. Indeed European Banks (+1.5%) and the STOXX 600 (+0.3%) just about closed with positive returns while the IBEX (-0.1%), DAX (-0.9%), Portugal General (-1.5%) and Greek ATHEX (-5.2%) all finished lower on the month. By contrast, the S&P 500 (+0.6%) notched up yet another monthly gain (seventh this year) despite the Nasdaq (-0.7%) ending lower. The NIKKEI (+6.1%) was actually the top performing equity market, albeit boosted by a -2.3% decline for the Yen.

Meanwhile bond markets steadily sold-off during the month. Treasuries and Bunds finished -1.0% and -0.9% respectively while Gilts ended -1.6%. EM bonds actually returned +1.5% but still remain well down on the year. Speaking of which, EM currencies bookended the leaderboard in September. The Turkish Lira recouped +8.2% of its August decline, however, the Argentine Peso shed -10.7% as an extended IMF bailout plan highlighted the extent of the issues facing the country. The broader EM FX index did, however, return +1.6%.