Weekly Investment Update: September 19, 2022


Key Events: Inflation pressures dominated

On Tuesday, then again on Wednesday, the markets were greeted with news of higher-than-expected inflation. These two pieces of data decreased the market’s optimism that the Fed might slow down its rate hike campaign. In fact, the odds of an even larger rate hike (1% instead of .75%) increased immediately following Tuesday’s inflation data. By the end of the day Wednesday that probability was 24%, up from zero a week prior [1] .

A potential strike of railroad freight workers added to worries about inflation, and Thursday the Philadelphia Federal Reserve released its economic outlook survey, which showed expectations for continued economic slowdown.   

Market Review: Inflation and growth fears hurt markets – again. 

The market sold off significantly on Tuesday and continued lower: the S&P 500 finished the week down 4.7%. International stocks lost much less, although they are still worse for the year.  

Inflation data caused bond yields to rise – and prices to fall – across the board. Corporate bonds lost more than government bonds, reflecting heightened recession fears which would hurt companies.  

Outlook: Volatility is likely to continue until greater clarity appears regarding inflation, the Fed and economic growth. 

Our view is that we are in a bottoming process and, assuming a mild recession, the market should find a bottom and begin to recover. Valuations in the bond and stock markets are compelling.  

Avoiding mistakes is the key to success in investing. Disengaging from the market when it is down is at the top of the list of mistakes to avoid – investors who left the market missed one of the top ten months in July. Remember to remain focused on your longterm plan and consult with your advisor to discuss how to best meet your goals.    

Navigator Outlook: September, 2022

[1]Source: CME Group

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Past performance may not be representative of future results.  All investments are subject to loss.  Forecasts regarding the market or economy are subject to a wide range of possible outcomes.  The views presented in this market update may prove to be inaccurate for a variety of factors.  These views are as of the date listed above and are subject to change based on changes in fundamental economic or market-related data.  Please contact your Financial Advisor in order to complete an updated risk assessment to ensure that your investment allocation is appropriate.