- Equity markets struggled this week as bond yields continued to push higher and test valuations.
- The S&P 500 fell 0.7%, with utilities down sharply, while consumer stocks and financials also struggled. Ten-year Treasury yields continued to rise on the week, as did most of the yield curve, before backing off somewhat on Friday. That despite some sluggish data and a well-behaved ‘supercore’ inflation print, which rose just 1.7% annualized in August, or 3.4% over the latest three months.
- Meantime, the TSX fell 1.2% as rate-sensitives and higher-yielding sectors struggled alongside new highs for GoC yields—as one example, the closely-watched 5-year yield pushed to 16-year highs.
Bottom Line: Some kind of economic resurgence in China is still likely, but it may not reach pre-COVID levels anytime soon.
Bottom Line: We expect a slow, gradual decline of consumer strength in the coming months.
U.S. Government Shutdown
Bottom Line: A short-term U.S. government shutdown would be unlikely to have a material impact on economic growth, but the UAW strike is a situation worth monitoring.
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