In a survey of market returns for August, Jeff Mayberry and Samuel Lau (3:25) note a decline of 4% on the S&P 500, with energy up 2.6% and utilities up 50 basis points (bps) to diverge from the negative sectors. The Russell 1000 Value, down 2.98%, outperformed the Russell 1000 Growth, down 4.7%. Turning to the fixed income markets (6:44), they point out that the month’s rise in yields such as 61 bps on the two-year Treasury and 54 bps on the 10-year Treasury understated significant intramonth volatility, especially around Federal Reserve officials’ policy retreat at Jackson Hole, Wyoming. For example, the two-year-to-10-year spread inverted to as much as negative 50 bps before ending Aug. 31 at negative 30 bps.  

Commodities managed to eke out a gain of 9 bps in August (10:55) amid the Dollar Index, which tracks the U.S. dollar against other developed market currencies, at its highest levels in over two decades. West Texas Intermediate crude oil front-futures were down 9% for the month. “Given some of the (economic) weakness and central bank tightening financial conditions,” Sam Lau says, “perhaps the commodity market is finally starting to succumb to some of the strength in the dollar.” 

After reviewing the JOLTS job openings report, nonfarm payrolls, unemployment and the labor force participation rate (19:20), Jeff Mayberry says, “All eyes are on the CPI number that we get in a couple of weeks, but certainly there’s nothing from the labor force side that would cause the Fed any concern that they shouldn’t raise rates.”

MMM Episode 81: A Month of Weaker Stocks, Volatile Bond Yields and a Dominant Dollar

Monday Morning Minutes