The Lookout | Week of September 12, 2022

The Lookout | Week of September 12, 2022

With several countries set to release August’s inflation numbers, investors will undoubtedly be curious to see the latest trend in the key economic indicator. With plenty at stake, Hunter Frey of Catalyst Funds, Rational Funds, and Strategy Shares offers his insights in this weeks edition of The Lookout.

Major Market Events:

Tuesday, September 13: US CPI YoY (Aug)

Wednesday, September 14: UK CPI YoY (Aug) & US Crude Oil Inventories

Thursday, September 15: US Initial Jobless Claims

Friday, September 16: EUR CPI YoY (Aug)

Hunter Frey, Investment Analyst, Catalyst Funds, Rational Funds, Strategy Shares 

• Risk assets (stocks and bonds) started the week positive as investors anticipate a softer CPI inflation print on Tuesday amid decreasing energy prices and a hawkish Fed. Though the CPI print remains an important indicator for investors to anticipate inflation impacts, the breadth of price moderation remains the most pivotal factor to a structural improvement in inflation and the Fed’s monetary policy outlook/guidance.
• Stocks and bonds may experience another macro induced week of volatility as the details of the velocity of the CPI’s components’ movement comes into question. Despite investors pricing in an inflation peak, historically weak September seasonality and continued monetary policy tightening both cast an ominous cloud of uncertainty over the potential returns in the weeks to come for riskier assets.
• With another 75 basis point hike by the Fed likely (despite a positive CPI print), investors should remain tactical to weather the macro uncertainty and trading volatility that is set to persist.