Mid-September is often a period of heightened volatility thanks to the expiration of many options and futures contracts, and this year is no exception. After a very strong first 8 months of 2021 that saw the S&P 500 up more than 20% YTD, normal seasonality has resulted in a modest pullback so far this month.
Despite last week’s softer market tone, incoming economic data was mostly positive. Inflation data was better than feared, with core CPI increasing just 0.1% sequentially in August, and falling to +4.0% y/y. Import prices echoed this trend, showing a small sequential decline in August. The Empire Manufacturing Survey and Philly Fed Business Outlook were both stronger than expected. And finally, retail sales exceeded expectations, rising in August after falling slightly in July.
Apple held its virtual fall product event, with CEO Tim Cook presenting the iPhone 13 and Watch 7. Both devices feature incremental improvements relative to previous models. Apple chose to keep its iPhone price tiers unchanged, despite rumors of input cost pressures coming from some component suppliers.
Most US equity benchmarks finished lower for a 2nd consecutive week, with no clear pattern across sectors and market caps. International benchmarks were pulled lower by the renewed selloff in Chinese equities.
Treasuries fluctuated on the back of moderating inflation data. 10y yields finished the week 2bp higher, while 30y yields closed 3bp lower. Credit spreads compressed slightly, taking their cues from incoming economic data.
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