Please find the next blog in our monthly series that provides a snapshot of the markets and the state of the economy.
- Inflationary pressures slowed as US Headline CPI eased to 8.5% vs. prior month’s 9.1%
- Labor markets remained tight with unemployment declining to 3.5% and nearly 2 job openings per every job seeker
- Hawkish messaging from the Fed cooled the summer rally, with Chairman Powell stressing the importance of acting forcefully against inflation
- Rates moved higher as markets adjusted Fed expectations
- Most risk assets declined; emerging markets outperformed
Asset Class Valuations
- Equity valuations still attractive over bonds
- Equity valuations favor US Small Caps
- H.Y. bonds and R.E. provide an inflation hedge
Market Sentiment Declined as Fed Turned Hawkish
Key Risk Factors We Are Watching
- Inflation and pace of consumer spending
- Tightening financial conditions
- Downward revisions to corporate earnings
- Ongoing geopolitical tensions
- Coronavirus variants
- Regulatory policy shifts (US and China in particular)
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