In 1972, Led Zeppelin recorded ‘The Song Remains the Same’. Fifty years on, market commentators could also be excused for wishing someone would change the music. Once again, inflation and the Federal Reserve dominated the headlines.

It was a week of two halves. Global stocks started the week strongly. The MSCI World equity index surged 5.65% in the first two days as markets speculated that the pace of central bank tightening might slow. News that US jobs vacancies fell by the most in nearly two and a half years contributed to these hopes and Tuesday saw the S&P 500 register its biggest single-day rally in two years.

Signs that US manufacturing activity appears to be peaking also added to the mood. The Institute for Supply Management survey showed that activity grew at its slowest pace for two and a half years. Manufacturers are struggling with a glut of inventories as household spending has rotated back to services following the lifting of pandemic-era restrictions. The problem of excess stock is something likely to weigh on the economy over the next six months.

But optimism fizzled out from Wednesday, and by Friday US stocks were in full retreat after data from the US Labor Department confirmed that the economy was still creating jobs at a strong pace, albeit there are signs that it may be starting to cool. But markets determined that the figures gave the Federal Reserve reason to continue with its aggressive interest rate hikes to quell inflation.

Markets are in a mood where bad news is good news (and vice versa), because signs of slowing growth might discourage central banks from imposing higher interest rates.

Several Federal Reserve officials emphasised that the inflation fight was ongoing and that they were not prepared to change course. By the end of the week, markets were pricing in a 92% chance of a 75-basis point interest rate rise from next month’s meeting of the Federal Reserve Open Market Committee. Next week’s CPI inflation figures are likely to be the key determinant of the Fed’s next move. It appears that substantial weakness in the economy – and maybe recession – is the price the Fed is prepared to pay for a return to lower inflation.

Newsflow in the UK continued coming thick and fast, although markets were more concerned with events across the Atlantic. Chancellor Kwasi Kwarteng followed his U-turn on plans to cut the additional rate of Income Tax with another about-turn to bring forward the publication of his debt-cutting plan and the forecasts of the Office for Budget Responsibility.

Following his attempt to reassure markets, UK government debt prices rose, and sterling returned to its level before the government announced its tax-cutting plan. But it didn’t appear to convince the credit ratings agencies. Fitch followed rival Standard & Poor’s in lowering the rating for UK government debt to negative from stable.

The cost-of-living challenge was underlined as Tesco, the UK’s largest supermarket chain, reported a fall in profits and warned that full-year earnings would be at the lower end of guidance. Tesco warned that people are “watching every penny” and said that customers are switching to cheaper own label products and putting fewer items in their baskets.

There was some positive news for the UK motor industry, as data released on Wednesday revealed a 4.6% rise in new car registrations in September. Demand for electric vehicles boosted the figures, but the Society of Motor Manufacturers and Traders (SMMT) warned that the overall market remained weak, and that recovery depended on robust consumer confidence and economic stability. Those may prove a forlorn hope. SMMT also cited the impact of persisting chip shortages constraining the supply chain and model availability.

In other motoring matters, the RAC accused supermarkets of raising their fuel margins by not passing on the recent drop in petrol prices. The average price of petrol fell by nearly 7p a litre in September, but the motoring group claimed drivers would have enjoyed a further 10p reduction had major retailers not opted to increase their margins.

But prices could soon be heading the other way. On Wednesday, the Opec+ cartel announced a big cut in oil production, in an aggressive move to raise crude prices which appeared to put Saudi Arabia on a collision course with the US and closer to Russia. The cut – which amounts to around 2% of global consumption – drew a furious response from Washington, which accused Opec+ of “aligning” with Russia and damaging the global economy.

The US jobs news dragged down European markets at the end of week but they finished the period marginally higher.

Manufacturing activity across the eurozone declined again last month as the cost-of-living crisis kept consumers wary and soaring energy bills limited production. Last week, the European Union agreed to impose windfall taxes on certain energy firms, as well as mandatory cuts in electricity use. A Reuters poll suggested a 60% chance of recession in the bloc within a year. It looks like it could be a tough winter.

Tax is a crucial part of financial planning. Taking advantage of the numerous tax reliefs and allowances not only means you don’t pay more than you need to, but it can also go a long way towards helping you achieve your financial goals.

But UK tax can be confusing at times, too. To help you get a better understanding of the system, here are our answers to some common UK tax queries.

Q) I read that I’ll pay 60% Income Tax when my earnings reach £100,000. Is it true?

A) There is no official Income Tax rate of 60%. However, a quirk in the tax system means that once your earnings exceed £100,000 a year, you start to lose your tax-free personal allowance at a rate of £1 for every £2 you earn over that amount.

“This amounts to an effective tax rate of 60% on earnings between £100,000 and £125,140, beyond which you’ll stop getting any benefit from the personal allowance,” says Simon Martin, Chartered Financial Planner at Technical Connection. “This is because the tapering of the personal allowance will cost you £20 in every £100, plus the £40 Income Tax you’re already paying.”

Q) When I sell my buy-to-let, how can I make sure I do so as tax effectively as possible?

A) “For lots of clients who aren’t sure when to sell, there’s a balancing act between paying Capital Gains Tax now or leaving an Inheritance Tax (IHT) liability when they die,” says Simon. “Quite often, it’s better to pay CGT at 18% or 28% than IHT at 40% down the line.”

What’s right for you, though, will depend on your circumstances, so it’s important to talk your options through with us.

Q) How can I make sure I’m using all my tax breaks and allowances?

A) The UK tax system features a host of tax-free allowances that can limit the amount of tax you pay on everything from your income to your capital gains and the money you leave behind when you die. So-called wrappers such as ISAs and pensions can also be used to shelter your savings from tax.

Talk to us about our Tax Health Check. This simple online tool could help show you if you’re missing out on any reliefs or allowances that could make your finances more tax efficient.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax reliefs generally depends on individual circumstances.

“I am confident the [energy] resilience is there, that people can enjoy their Christmas.”

Nadhim Zahawi, Chancellor of the Duchy of Lancaster, says the chances of energy blackouts this winter are ‘extremely unlikely’