Bye-Bye Pivot: Market Update 3rd September 2022

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This past week has seen a significant shift in market sentiment, driven off the back of hawkish tones from Jackson Hole, as Central Bankers underscored that squashing inflation was their main task, whatever the cost.
Markets had been betting on a Fed Pivot soon (recalling the last cycle where markets had their way and the Fed turned), hence the bear market run-up in the past couple of months, but that for now is in tatters.

Further falls into a typically wobbly September can be expected. Mind you, the FED has not explained why their forecasts were so off, so it does beg the question as to whether we should believe them now. And consider the wider fallout globally, as higher rates and a strong dollar will put many markets and countries under pressure. Note the swing between the USD and Yuan, and the Yen. Perhaps this is not accidental.

Plus, the markets are worried about "China slowing, euro zone recession and a hawkish Fed". Equity funds recorded the fourth largest weekly outflow of 2022, while bond funds saw investors pull out money for a second straight week.

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