Since the 1st of October the ASX 200 is up some 13%, meaning that year to date the Australian market is now in positive territory – certainly not what most investors would have thought after the volatility in markets this year. And while other international markets have been negative year to date, they have also seen a rally in prices of around 10% since the end of September.
Many are calling this a Santa Rally, with the implication that just like Santa this is imaginary and will disappear quite soon… Or is this a real rally? Have markets fully priced in future interest rate movements, terminal rates and coming recessions, and we are now witnessing a sustained rally in equities?