SWS September Insights

Volatility Continued but Markets bounced back, anticpiating Fed Action

As a reaction to weaker than expected jobs data1 , August began the month with a bout of volatility, where the S&P 500 experienced its worst three-day slide since June 2022 and its worst individual day since October 20222 . All the volatility caused the CBOE Volatility Index (VIX) to blow past the 60-level intraday before settling around 38, levels last seen back in October 2020. Rates fell across the yield curve throughout August, where the 1-year and 2-year experienced the largest declines in yield, starting the month at 4.74% and 4.26%, then ending at 4.40% and 3.92%, both respectively. The 1-month again held steady, only losing 11 basis points and still yielding the highest rate of 5.26%. The decline in rates pushed up bond prices and caused the Bloomberg US Aggregate Bond Index to end the month in the green, up 1.44%. Since the jobs report was not as strong as expected1 , concerns arose over whether the Federal Reserve’s recent decisions to maintain two-decade high rates may risk a deeper economic slowdown than intended. As a result, Federal Chairman Jerome Powell voiced his concerns in Jackson Hole, stating that the time has come to adjust and lower the Federal Reserve’s key policy rate3 . Following the recent progress on inflation, Powel expressed his confidence on the sustainable path back to the target rate of 2%3

September 2024 Monthly Report.pdf

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