Please find the next blog in our monthly series that provides a snapshot of the markets and the state of the economy.
- At its September meeting, the US Federal Reserve hiked the Federal Funds rate 75 bps to 3-3.25%, the third consecutive hike of that magnitude
- The August jobs report showed slowing growth with unemployment rising to 3.7% from 3.5%, but the labor market remains strong overall
- US inflation surprised to the upside, with core CPI increasing 6.3% year-over-year, up from 5.9%
- Difficult month across assets; saw many new YTD lows
- Third straight negative quarter for both stocks and bonds
Asset Class Valuations
- Equity valuations in line with historical averages
- Favor investment grade credit over high yield
- Higher cash weight provides flexibility
Central Banks Largely Synchronized in Tightening
Key Risk Factors We Are Watching
- Inflation and pace of consumer spending
- Tightening financial conditions
- Downward revisions to corporate earnings
- Ongoing geopolitical tensions
- Regulatory policy shifts (US and China in particular)
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