Market Pulse

This weekly publication provides a brief note on market views heading into the week, highlights what we're watching, and important news ahead.

Jeff Terrell, CFA

Senior Investment Strategy Analyst

Truist Advisory Services, Inc.

Chip Hughey, CFA

Managing Director, Fixed Income

Truist Advisory Services, Inc.

Dylan Kase, CFA

Investment Strategy Analyst

Truist Advisory Services, Inc.

In focus

A holiday-shortened week ahead may provide a brief respite before accelerating towards a final push to finish 2021. 

  • Economic data is light with the Producer Price Index (PPI) and job openings (JOLTS) on the Federal Reserve’s (Fed) radar for their upcoming meeting.
  • Congress is in recess, but House committees are busy marking up reconciliation legislation for a vote later
    in the month.
  • Seven Fed officials hit the speaking circuit this week. Investors will be interested to see if there is any change in tune after last week’s weaker (but not weak) employment report. 
  • Extended unemployment benefits for 24 states rolled off on September 6, which could work its way into future calculus for employment, savings, consumption, and sentiment data.

Balance and moderation are likely themes in the coming months.

  • The 10-year U.S. Treasury began the year at 0.93%, peaked at 1.74% in March, and now sits at its current 1.32% pivot point awaiting data-dependent Fed decisions.
  • The average decline in earnings estimates during the first two months of a quarter has historically been -3%. Q3 estimates anticipate a 3.8% increase from Q2, the fourth highest since 2009 but lower than Q2 and Q1 of this year. Estimates remain robust but have begun to moderate in line with economic growth.
  • When Congress returns to debate infrastructure and a reconciliation bill, the likely result will be lower than the current $3.5 trillion proposal. The most influential Joe in the room may be Senator Joe Manchin given the Senate’s 50/50 split.

A look back

  • Global markets edged higher with Japan’s Nikkei 225 surging by more than 6% last week after the resignation of Prime Minister Suga after just one year in office. The S&P 500 closed the month higher by 3.0%, recording its seventh consecutive monthly gain.
  • Treasury yields remained flat for the week after digesting the weaker than expected jobs report.
  • August payrolls gained just 235,000 jobs, falling nearly half a million short of expectations, with weakness in the services sector. This could weigh on the Fed’s tapering decision in their upcoming meeting.

A look ahead

  • House committees will be working behind the scenes preparing for a final push on reconciliation legislation once the Senate and House return from their recesses in the next 2 weeks.
  • The Fed’s Beige Book will be released Wednesday, providing a glimpse of labor market, inflation, and manufacturing data across the 12 Fed districts and any impacts from the Delta variant.
  • Economic releases: JOLTS Job Openings, PPI, MBA Mortgage Applications, and Wholesale Inventories.

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