The strike against the Big Three US automakers by the UAW and the Fed’s stating that it will be tighter for longer, perhaps pushing rates even higher this year – with financial markets apparently believing the message – were all bad news items in the past month. Moreover, it was a terrible month for financial assets, with big drops in broad equity indices and bond prices. (At least the economy sidestepped a hit from a federal government shutdown, for now.) Despite the bad news, real GDP growth for the third quarter is expected to be strong (with the Atlanta Fed’s GDPNow looking for 4.9 percent annualized). Moreover, the job market remains solid – hardly any sign of a slowdown, let alone a recession. Soft landing? Maybe, but most inflation measures remain around double the Fed’s long-term 2.0 percent goal. We still think that the cumulative impact of significant Fed tightening since early last year will be increasingly visible in the economic and financial data as 2023 winds down – and even more so as 2024 begins.

Details at link below:

https://www.cumber.com/market-commentary/economic-and-financial-markets-review-september-2023