There are legitimate reasons to be concerned about the world economic outlook and certainly in the context of global market turmoil. Including this week’s losses, the Dow, Nasdaq, S&P 500, and Russell 2000, declined -9.0%, -10.5%, -9.3%, and -9.7%, respectively in September. It is also worth to note that the US 2-Yr bonds yield and US 10-Yr bonds yield have displayed inversion since September. The worry for the market is that the Fed’s rush to normalization will go too far and create a material economic slowdown, if not an actual recessionary meltdown.
Investors will be looking closely at Friday’s U.S. jobs report to assess how much impact the Federal Reserve’s rate hikes are having on the economy. U.S. markets look set to remain volatile after closing the books on their third straight quarterly decline on Friday. Meanwhile, OPEC is reported to be considering a major production cut at its upcoming meeting on Wednesday.
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