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We closed out the month of September with a week for the bears, as we avoided a government shutdown and face the realities of a slowing economy. Consumers are feeling less confident in the economy, while new home sales came in slimmer than expected.

Other important economic data points provided mixed signals this week including bearish leading indicators, a slow existing home sales market, and strong labor data in initial claims. Overall, we remain partially bearish and partially bullish on this unique environment, as we see the end of the rate hiking cycle coming closer to an end.

Despite a variety of bearish inflationary data including CPI and PPI, we saw equity markets close higher for the week as of Thursday. Inflationary data rose more quickly than expected as energy prices weighed heavily on both consumers and producers in August.

Equity markets declined this week, with August’s ISM Services and Manufacturing Indexes coming in higher than a month ago. Initial jobless claims came in much lower than expected, and Apple faced challenges from Chinese iPhone restrictions on government workers. The upcoming September FOMC meeting is expected to maintain rates, but market sentiment could quickly shift with a surprise in August CPI data.

Currently, we are carefully observing the potential effects that these actions may exert on both markets and our portfolios. This vigilant monitoring will persist as the well-being of the banking system remains a critical component of the functionality of both the US and global economies.

Inflation continued to show disinflationary signs this week with July’s CPI and PPI figures coming in, as small & mid-sized banks were downgraded by Moody’s and surprised investors. Additionally, we saw that consumers are feeling more encouraged by economic conditions as seen in the University of Michigan’s Consumer Sentiment Index, despite oil prices rising in July. In every economic environment, we look forward to continuing to monitor markets closely.

This week was a week for the bulls, with Consumer Confidence and higher personal spending demonstrating an optimistic consumer and Durable Goods Orders pointing to resilient industrial demand. Fed Chair Jerome Powell brought us another 0.25% rate hike in the July FOMC, as key PCE inflation on Friday pointed to a continued disinflationary environment.

During this quarter, the Federal Open Market Committee met twice, once in May and once in June. May’s meeting brought a 25-basis point rate hike, bringing the target range to 5.0-5.25%, while the June meeting brought the most recent Summary of Economic Projections from the Fed members.

n another month of disinflation, CPI, PPI, and PCE all made downward moves, as the Federal Reserve decided against another rate hike at their June FOMC meeting. Although data is slowly but surely moving in the right direction, the fight against inflation remains.

Our team of skilled analysts will diligently monitor economic data as it becomes available in order to effectively manage each portfolio across different macroeconomic environments.