Economy
- U.S. equities charged higher during the week ending September 9 due to improved optimism and resilience in the U.S. economy, bolstered by favorable economic reports. Data suggested that the U.S. economy and demand—although cooling—remained healthy, which could be expected to keep a lid on inflation. Meanwhile, Federal Reserve (Fed) Chairman Jerome Powell affirmed the central bank’s commitment to extinguishing inflation. The Fed appeared on track to deliver another 75 basis point increase at its September meeting.
- U.S. manufacturing activity (which accounts for about 12% of the economy) lost momentum in August, shrinking to 51.5 from 52.2 in July, as measured by S&P Global’s manufacturing purchasing managers’ index (PMI). The sector has been challenged by reduced demand, supply-chain disruptions, and a shortage of factory workers in recent months. A similar report from The Institute for Supply Management (ISM) showed deceleration in manufacturing activity in recent months.
- Activity in the U.S. services sector also decelerated, according to the S&P Global’s U.S. services PMI. The reading, which slipped to 43.7 in August from 47.3 in July, showed that labor and supply shortages, as well as rising inflation, presented continued challenges. One bright spot was new orders, which remained buoyant due to steady consumer demand. A similar report from ISM showed an improvement in services activity during the same period, primarily due to an increase in new orders.
Stocks
- U.S. equities were in positive territory. Materials and financials were the top performers, while energy and telecommunications lagged. Growth stocks led value stocks and small caps beat large caps.
- Global equities closed higher for the week. Developed markets fared better than emerging markets.
Bonds
- The 10-year Treasury bond yield increased to 3.32% during the week.
- Global bond markets were in negative territory this week.
- High-yield bonds led, followed by global corporate bonds and global government bonds.
