Mid-Week Market Minute 09.29.21

Market Updates

Stocks traded lower this week as benchmark interest rates rose across the board. When rates go up, it signals that markets anticipate interest-rate hikes, which make borrowing more expensive. The yield on the 10-year U.S. Treasury note rose to 1.54%, the highest it’s been since June. The Federal Reserve Chair Jerome Powell said Monday that the inflation test for scaling back the Fed’s bond-buying has been met, while the employment test “is all but met.” Another Fed Governor stated that the labor market may soon meet her yardstick for scaling back asset purchases. This points toward the possibility of the Fed initiating tapering of asset purchases soon, and interest rates have risen as a result. Investors also monitored developments in Washington, as Treasury Secretary Janet Yellen continued to urge lawmakers to raise the debt ceiling ahead of October 18, the projected date the U.S. could run out of cash. Historically, that’s been a bipartisan task (it’s been done 100 times since WWII). Separately, investors continue to evaluate supply-chain bottlenecks and their effect on inflation, as well as China’s growth slowdown and a debt crisis in that nation’s property market. Economic data is light this week, highlighted by personal income and outlays reported on Friday. In commodities, WTI crude oil is now up more than 55% year-to-date despite a stronger dollar and unexpected buildup in domestic stockpiles.

Source: GSAM, Daily Upside, JPM, Factor Investor

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