U.S. equity-market leadership reversed course during the third quarter of 2024, with small cap stocks outperforming their large cap counterparts and the value factor beating the growth factor.

Markets started the year anticipating several U.S. Federal Reserve (Fed) rate cuts in 2024, but by the end of the first quarter, a continued string of stronger-than-anticipated economic data readings led to a significant dialing-down of expectations.

A renewed sense of optimism emerged during the fourth quarter, sparking an increase in U.S. equity trading volumes and a rally in risk-on fixed income assets.

Credit volumes witnessed some strong highs and lows in the third quarter. Notably, July—a month where trading volumes are generally steady—saw very inconsistent flows over the month. September, meanwhile, followed historical trends with an increase in primary market supply, reflecting higher volumes in the secondary.

Equity and fixed income markets experienced heightened volatility amid the Q2 debt-ceiling saga, while currency and derivatives markets were mostly unaffected.