Economy
- U.S. equities tumbled during the week ending September 16 due to negative investor sentiment related to uncomfortably high inflation. Sticky inflation means high prices will be slow to change, despite the Federal Reserve’s (Fed) aggressive attempt to get inflation under control through large interest rate hikes and the potential risk of a prolonged recession.
- Bond prices fell as high inflation suggests that additional interest rates hikes by the Fed will be forthcoming. The central bank is on track to deliver another 75 basis point increase at its meeting this week.
- Core U.S. inflation (which excludes volatile food and energy prices and is the number the Fed looks at when making monetary policy decisions) accelerated by 6.3% year over year. This unexpected reading crushed investor sentiment even though overall inflation continued to ease off of a 41-year high of 9.1% in June to 8.3% in August.
- The average interest rate on a 30-year fixed-rate mortgage continue to rise, moving from 5.89 to 6.02% (the highest reading since 2008).
Stocks
- U.S. equities fell nearly every day during the week. Health care and telecommunications fared best, while materials led the decline. Value stocks led growth stocks and small caps beat large caps.
- Global equities closed lower for the week. Emerging markets fared better than developed markets.
Bonds
- The 10-year Treasury bond yield increased to 3.45% during the week.
- Global bond prices were in negative territory this week.
- Global government bonds led, followed by global corporate bonds and high-yield bonds.
