Fast food for thought

Insights and research on global events shaping the markets

The worst month for S&P & Nasdaq since Dec 2022. Higher oil prices, higher yield and the increasing likelihood of a U.S. government shutdown continue to weigh on investors’ sentiment. The yield on the 10-year U.S. Treasury note peaked above 4.6% on Wednesday. However, yields ticked modestly lower after the release of encouraging eurozone and U.S. inflation data. The S&P 500 Index suffered a fourth consecutive weekly pullback. Within the index, utilities lost the most ground. Energy stocks, on the other hand, outperformed.

The Fed pauses rate hikes but fails to calm markets; S&P 500 down 2.9%, US bond yields rise. Each week, the Syz investment team takes you through the last seven days in seven charts.

The Fed held its September meeting and the message from Jay Powell was clear: they will continue to keep rates elevated until inflation moves more convincingly toward 2.0%. The Fed held rates steady at 5.25% - 5.5% at this meeting but kept the option of an additional rate hike on the table, maintaining its outlook for a peak fed funds rate of 5.6%. The S&P 500 and the technology-heavy Nasdaq Composite reacted negatively, dropping 2.9% and 3.6% respectively. That marked the third straight negative week and worst weekly performance since March for each. As Vanda Research notes, inflows into the artificial intelligence (AI) sector continue to decline.

The FOMC kept rates unchanged as expected but made clear that higher rates are the new normal. US 2-year yields hit the highest level since 2006, after what can be described, as a still somewhat hawkish Fed.

The oil supply shortage is set to worsen in Q4, European key rates are at their highest since the ECB was founded in 1999 and the US 12-month inflation continues to remain high in many segments of the economy. Each week, the Syz investment team takes you through the last seven days in seven charts.

US stocks had a mixed week, with value stocks leading the market as U.S. WTI oil prices rose above $90 per barrel for the 1st time since November 2022. Tech and growth stocks lagged after Apple’s new product introduction event on Tuesday that featured a price increase on its top-of-the-line iPhone 15. However, broad market sentiment received a boost from the largest IPO of 2023 as shares of Arm started trading on the Nasdaq on Thursday. Wednesday’s release of the August CPI data showed that the Fed has made progress in its fight against inflation, but rising energy prices may prompt the central bank to further tighten monetary policy. The headline CPI numbers showed the largest monthly increase since August 2022, due to the effect of higher gasoline prices.

The ECB just raised its key rates again today, by 25bp (main Refi rate at 4.50%, deposit rate at 4.00%).

Mexican imports surpass Chinese ones in the US, marking a significant trade shift. Oil prices continue to rise, markets anticipate that the Fed will take a break in September amid a long period of US equity outperformance. Each week, the Syz investment team takes you through the last seven days in seven charts.

Stocks closed lower over the holiday-shortened week as positive economic data drove an increase in bond yields. Growth stocks and large-caps outperformed value and small-caps. Apple was one of the main negative performance contributors after news that Chinese government employees would no longer be able to use iPhones. Declines in NVIDIA and other chipmakers also weighed on the indexes. Macroeconomic data surprised on the upside. E.g the ISM report on August services sector activity jumped unexpectedly to its highest level since February. Meanwhile, Thursday’s weekly jobless claims report came in lower than expected; the number of Americans applying for unemployment in the previous week fell to 216,000, the lowest level in six months.

US macroeconomic data disappointed, leading to an upward revision in the US interest rate outlook, while concerns over a potential property and financial crisis in China weakened foreign demand for US Treasury bonds. Simultaneously, US equity and bond markets experienced a correction, with energy stocks gaining but banking stocks being sold off. Here are 10 charts to help you look back on what happened in the markets during the month of August.

1 2 3 4 5

Straight from the Desk

Syz the moment

Live feeds, charts, breaking stories, all day long.

Thinking out loud

Sign up for our weekly email highlighting the most popular posts.

Follow us

Thinking out loud

Investing with intelligence

Our latest research, commentary and market outlooks