- The strong consumer and robust jobs market are supporting the economy, but cracks may be appearing in the unemployment rate and consumer confidence reading.
- Unemployment ticked up to 3.8%, indicating a softer — but not cratering — jobs market.
- Inflation increased slightly month-over-month, but continues to show progress relative to the high levels seen a year ago.
Select economic and market data
Statistic (monthly unless noted)
|U.S. GDP (quarterly)||2.1%||2.0%|
|Consumer Price Index Y/Y||3.2%||3.0%|
|Core PCE (x food & energy)||4.2%||4.1%|
|ISM Manufacturing Index||47.6||46.4|
|2-Year Treasury Yield||4.87%||4.88%|
|10-Year Treasury Yield||4.11%||3.96%|
- Equities were weaker in August, with the S&P 500 & Nasdaq suffering their first down month since February.
- Ten of the 11 sectors in the S&P 500 were negative in the month, with Energy the lone bright spot.
- International indices underperformed as European business activity contracted and China’s slowdown continues.
- The Fed’s annual trip to Jackson Hole resulted in relatively benign talking points, with Powell acknowledging the balancing act between over-tightening and containing inflation.
- Yields moved higher in August with the 10-year treasury hitting a 15-year intra-month high of 4.36% before settling at 4.11%.
- Above-average volatility is likely given elevated inflation and heightened central bank involvement.
- Some caution is warranted on equities in the near-term; currently favoring small-cap and mid-cap domestic stocks longer-term.
- Incrementally extending duration in the fixed income portfolio as the intermediate part of the curve is becoming more attractive.
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