Hey folks, markets are choppy as we go thru the later part of summer into the early fall months and clearly living up to price action expectations…thus far we are on track for the end of summer price action weakness before the end of year move higher…at least from a statistical perspective this is what prior years have shown us. Will this year be different? Get my take in this week’s round-up.
WEEKLY SOUND BITES:
US indexes finished mixed on the week and down for Sept with the S&P finishing lower by 5.35% and for the 3rd Qtr. by 3.65%. This markets the 4th consecutive weekly pullback for the S&P as upward pressure on rates appeared to weigh on investor sentiment. Higher oil prices also contributed to concerns that inflation could prove more difficult for central banks to tame, spurring a sell-off in bonds while we also saw increasing likelihood of a U.S. Gov shutdown weighed on investor sentiment. The yield on the benchmark 10-year U.S. Treasury peaked above 4.6% mid-week.
In August, the core personal consumption expenditures (PCE) index, which the Federal Reserve watches closely and excludes the volatile food and energy categories, increased 3.9% from year-ago levels—the lowest annual inflation rate in about two years but below the central bank’s 2% target. This latest reading represents a moderation from the upwardly revised 4.3% annual inflation rate logged in July. On a month-over-month basis, core PCE inflation came in at 0.1%, which was below expectations. Including all items, monthly inflation quickened to 0.4% from 0.2% in July, mainly driven by higher energy prices. U.S. consumer confidence dipped to 103.0 in September, a reading that was below expectations and down from the preceding month’s upwardly revised reading of 108.7.
In Europe we see that ECB officials reaffirmed their commitment to maintaining a restrictive monetary policy for an extended period to bring inflation back to the 2% target. Consumer prices increased 4.3% annually in September—weaker than forecast and the slowest pace in about two years. This inflation rate was a marked improvement from the 5.2% registered in August. Meanwhile, in the UK, their economy grew faster than expected in the first three months of the year, according to revised figures for GDP. The Office of National Statistics pegged first-quarter growth at 0.3%, as opposed to its previous estimate of 0.1%. Its estimate of second-quarter GDP growth was unchanged.
In Japan, the yen traded mostly within the JPY 148 range against the USD, although it briefly weakened past JPY 149 to hit an 11-month low. The yield on the 10-year Japanese government bond (JGB) rose to 0.76% from 0.74% at the end of the previous week. The JGB yield reached its highest level in over a decade, despite the BoJ stepping into the market to buy JPY 300 billion (USD 2 billion) of JGBs with maturities between five and 10 years.
Chinese stocks fell in a holiday-shortened week as a lack of positive news on the economy dampened investor sentiment. The blue-chip CSI 300 Index and Shanghai Composite Index both fell for the week ended Thursday. Stock markets in mainland China were closed Friday, the start of a 10-day holiday for the Mid-Autumn Festival and National Day, and will reopen Monday, October 9. No official economic indicators in China were released during the week. Official data for August released earlier in September also pointed to signs of stabilization in the Chinese economy.
Enjoy this week’s round-up
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