OPEC+ announced a plan to decrease oil supply by 2 million barrels per day beginning in November. It is important to note that this is a quota reduction, and the real drop in output is projected to be greater than 1 million barrels per day. Nonetheless, it will exacerbate the supply/demand mismatch, particularly because EU and G7 sanctions are due to begin in December. OPEC+ justified its decision by claiming that it was vital to safeguard both the oil sector and their respective domestic economies from increasing interest rates and decreasing GDP. OPEC+ is likely concerned that a predicted recession in 2023 could devastate demand and prices. On the other hand, the decision contradicted the G7's calls for increased output in the face of a looming European energy crisis.
Treasury yields in the United States rose Friday morning with the release of nonfarm payrolls data, reversing a decrease earlier in the week caused by a drop in job vacancies and the Australian central bank's decision to hike rates by 0.25% rather than 0.50%. (Trends and bond prices move in different directions.) The whole municipal bond market soared for most of the week, outperforming Treasuries significantly.
Germany's 10-year government bond rates retreated to recent highs after minutes from the European Central Bank's (ECB) September meeting revealed policymakers' growing concern about high inflation, perhaps paving the path for another big rate rise in October. In the eurozone, yields jumped significantly. After statistics revealed that eurozone inflation surged to 10% last month, sovereign bond rates in France, Spain, and Italy rose from the week's lows. In the United Kingdom, 10-year gilt rates rose after Fitch Ratings downgraded the country's credit outlook to negative, after a similar move by Standard & Poor's last week.
According to a KPMG report, CEOs are putting a number of ESG initiatives on hold as they strive to prepare their firms for the effects of a prospective recession.
As CEOs seek to preserve optimism and take precautions to protect their firms from an impending recession, signs indicate that ESG development will suffer as a result, following the pattern of CEOs reevaluating projects in many sectors of the organisation (e.g. transformation and staffing). As economic uncertainty persists, half of respondents are paused or evaluating their present or planned ESG activities over the next six months, and 34% have already done so. ESG has evolved into a commercial need. Delaying critical ESG initiatives may cause firms to become more reactive in the future, rather than leading the way with increased transparency, resilience, and sustainability.