At the September FOMC meeting, the Fed left rates unchanged but used hawkish rhetoric to signal that rates will stay higher for longer. Even though inflationary pressures appear to be under control for now… consumer spending is still strong. Historically, inflation has been known to remain sticky, as evidenced in the 1970s high inflationary environment. Fed chair Jerome Powel is well aware of historical patterns. He has stated the Fed will remain adamant about keeping inflation down, thus likely keeping rates higher for longer.
Turning to markets, September was a lackluster month in the US as the S&P 500 dropped nearly 5%, with 10 of the 11 sectors decreasing during the month. Although YTD, the stock market remains positive, with the S&P 500 up about 13% at the time of this recording. Bond Yields moved higher during the month, signifying some degree of normalcy between bond and equity markets, as typically, when stocks go down…bond yields go up.
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