THIS WEEK
The ISM Services PMI came in over expectations, increasing month-to-month, and in expansionary territory. The ISM Manufacturing PMI also came in over expectations staying flat in August.
Regardless, the Fed has made clear that further rate hikes are a certainty. The questions facing investors now are:
Will the Fed break something in its quest to quash inflation?
If it does, what will it break?
Is a soft landing possible?
Stocks remain under pressure.
ELECTIONS APPROACHING
MARKET CHARTS
The AGG’s inception was 1976, before the runaway inflation of 1979-1980, and this year remains far and away the index’s worst start ever.
The chart below left, from Michael Batnick, charts the S&P 500 returns on the horizontal axis and the Aggregate bond return on the vertical axis. You can see that 2022 is in a league of its own.
Gasoline futures currently at $2.30…should translate to $3.15/gallon in about a month. The broad basket commodities index ETF, DBC, fell below its 200-day moving average for the first time since October of 2020.
Institutional traders bought record amounts of put options, hedging their positions to protect on anticipated downdrafts.
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