As an awful August gives way to an uncertain September, investors hope this month will confirm that the seemingly relentless rise in interest rates will end soon, meaning respite for both stocks and bonds.
There are plenty of catalysts for volatility. The Sept. 13 U.S. inflation reading would likely have to support the narrative of cooling consumer prices and resilient growth that has boosted stocks for most of the year. Germany’s coalition just agreed a 7 bln euro corporate tax relief package to give the economy what Chancellor Olaf Scholz called a “big boost”.
Multilateral institutions and creditor countries have used most international gatherings to refine the Common Framework agreement that was meant to make recovering from debt distress quicker and easier. Rates are at an 11-year high of 4.1% after 400 bps of tightening since May 2022. Traders expect that to be the peak, after inflation unexpectedly eased to a 17-month trough below 5% in July.