Good Morning,
It was a beautiful fall weekend! The upcoming end of Q3 also means the start of deer season here in Michigan. Good luck to all the hunters!
Stocks ended broadly higher last week, while bond yields continued their climb. The transmission remains fairly straightforward: geopolitics is pushing oil prices higher, oil is shaping the inflation outlook, and inflation is driving interest rates, while AI remains the market’s strongest counterweight.
Investors are now assigning roughly a 70% probability of another Fed hike next month. Meanwhile, the jump in yields is hitting precious metals particularly hard, with gold down more than 3% and silver nearly 5%.
This Wednesday, we get the latest reading on PCE, the Fed’s preferred inflation gauge, followed by the September jobs report on Friday. I believe the Fed will hike again in October, although a weaker than expected jobs report could lead investors to more closely scrutinize the likelihood of additional hikes beyond that.
From an overall market momentum standpoint, the key question remains whether AI leadership can continue to carry equities if oil prices remain elevated and financial conditions continue to tighten.
Despite all the noise of late, the S&P 500 remains within 1% of its all-time highs. I continue to view periods of near-term volatility as potential buying opportunities as we enter Q4.
Please reach out with any additional questions or comments.
Attached is this week’s Market Strategy Radar Screen Report from John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management.
Have a great week!