Not for the first time in 2012, financial markets were in thrall to the whims of politicians during the late stages of the final quarter, as bickering and brinkmanship within Congress over $600 billion of impending tax rises and spending cuts took budget negotiations past their year-end deadline, thereby threatening to put a 4% dent in the US’s GDP and send the world’s largest economy back into recession. This made for a somewhat jittery backdrop at the end of a period in which equity and credit markets recorded modest gains, core government bonds edged lower, commodities fell back and the Dollar held station.
