Private Investor's Diary: A high-quality addition to my portfolio

October was a miserable month for financial markets. Government bonds and equities both fell. It started with continued weakness in US Treasury bonds. Having ended September at 4.6 per cent, the US 10-year Treasury bond yield continued to rise into October. The horrifying events in Israel caused a brief rush to safety before the relentless march up in yields continued. On the morning of 23 October, the yield on the 10-year Treasury touched 5 per cent for the first time since 2007. That spurred Bill Ackman of Pershing Square into action. He tweeted that the company had closed its short position. He was joined by Bill Gross, who said he was buying Treasuries as he foresaw a looming US recession. Whether that was the catalyst or not, yields quickly retreated. Following the 1 November decision by the Federal Reserve to keep interest rates on hold, the 10-year Treasury yield had dropped back to 4.7 per cent. The pattern was similar in the UK and continental Europe: yields peaked mid-month before falling away.

It proved another difficult month for equity investors on both sides of the Atlantic. Major indices were under pressure before rallying in the last few days. The Nasdaq Composite was down 2.8 per cent, and the S&P 500 was down 2.1 per cent. Cracks started to appear in the ‘magnificent seven’ – Apple (US:AAPL), Microsoft (US:MSFT), Alphabet (US:G00GL), Amazon (US:AMZN), Nvidia (US:NVDA), Meta (US:META) and Tesla (US:TSLA). The S&P 500 fell 2.1 per cent over the month and was 10 per cent off its July high at one stage. This year, it is still up 10 per cent, but would be broadly flat without the seven tech stocks.