The S&P 500 Index returned -2.19% during the week as selloffs on Tuesday and Thursday caused a negative monthly return for September of -4.76%. September was the worst month for the S&P 500 since March 2020 and snapped a seven-month positivity streak. Selloffs on Tuesday and Thursday were due to inflation fears, largely caused by the supply chain meltdown, and communications from the Fed that it may begin rolling off quantitative easing by the end of 2021. Retail demand continues to rise as August Personal Consumption numbers released on October 1st beat economist estimates and consumer balance sheets are still very strong. Equity markets also reacted after Fed Chair Powell’s statement on Tuesday reaffirming that the central bank may begin tapering its bond buying as soon as the November meeting and possibly reduce the current purchase rate of $120B per month to zero by the middle of 2022. The Energy sector was the bright star of the week, returning 5.8%
U.S. Treasury bond yields were mixed last week with yield curve steepening as the long end of the curve held on to gains. Treasury yields increased across the yield curve on Monday and Tuesday before dropping for the rest of the week as the equity market selloff led to investors seeking safe haven investments, such as treasury bonds.