The last month of the third quarter ended with a very negative performance in almost all assets.
There were sell-offs, with equities falling nearly 10% in September and bonds suffering their worst month in decades.
Stock selling accelerated at Friday's close after bouncing earlier in the session to close at daily, monthly, and yearly lows.
The release of the PCE (personal consumption expenditure) figure on Friday did nothing to improve market risk sentiment. Core PCE year over year, the figure the Federal Reserve tracks, rose as much as 4.9% after a revision of the previous month's data to 4.7%, with the monthly figure also coming in higher than expected at 0.6%.
Therefore, the Federal Reserve sees no reason to slow the pace of interest rate hikes in the face of persistently high inflation. Fed officials' comments have remained very hawkish, and everything points to the next rate hike being 75 basis points in October.
Nonetheless, the figure did not affect US Treasuries, with little change in price and yield during the session. Typically, a new rise in yields would have been expected after this figure, which in the case of the 10-year bond, remained at 3.83%.
This can only mean that investors anticipate a significant economic slowdown, owing largely to the Federal Reserve's aggressive monetary policy. Still, it also reflects the enormous uncertainty caused by the geopolitical situation in Ukraine. Putin's announcement of annexing regions in the country's east does nothing but raise tensions and pushes a potential end to the conflict back in time. Statements mentioning the use of tactical nuclear weapons aggravate the situation.
As if that weren't enough, the market has spread rumors that a large multinational bank is in serious trouble and may be on the verge of bankruptcy. If true, this latest news would hugely impact the market since the already complicated situation would enter a new phase with fears of a financial crisis.
The US dollar remains a safe haven currency, commodities are under pressure, and all three major Wall Street stock indices fell around 1.70%, with the DowJones 30 already trading below recent lows from last June.
Sources: Bloomberg, Reuters