“Life starts all over again when it gets crisp in the fall.”
-F. Scott Fitzgerald
Here’s what you need to know this week:
· A positive summit with the Chinese President drives stocks higher
· All signs point to more interest rate hikes from the Federal Reserve
New Office – Two Weeks Away!
Quick reminder, we’re moving! Our new office is located about one mile from our current office:
Our old office is circled in red and the new office is circled in green. Our new address will be 3817 NW Expressway Ste 1030. We officially move in about two weeks and we will be hosting a few open house events once we are fully settled in to the new office so keep an eye out for those announcements coming soon!
Rebound
Stocks ended their two-week slide last week on optimistic news from President Trump’s summit with Chinese President Xi Jinping. The two presidents convened to discuss a range of issues and made a couple of preliminary agreements. The first was a two-month truce in President Trump’s ongoing tariff campaign, and the second was an agreement to ongoing dialogue discussing AI development during the truce[1].
The contours of the agreements were vague but they were good enough for investors to bid stocks higher. The Dow Jones rose 0.3%, the S&P 500 gained 1.2% and the tech-heavy NASDAQ jumped 2.1% to reach a new record high[2]. Investor optimism was also bolstered by positive discussions with Iran at the UN General Assembly in New York last week, (temporarily) driving oil prices lower.
Yields, Inflation, Jobs
This week, investors are contending with three factors that point towards more interest rate hikes from the Federal Reserve. The first is a sharp upswing in US Treasury reserves:
When investors expect interest rates to rise, they sell their existing bond holdings so they can buy new bonds with higher coupon rates. This selling drives the prices of existing bonds lower and pushes their yields higher. This is what I mean when I say the bond market is “pricing in” upcoming rate hikes. As of today, the bond market is pricing in a 65% chance of a 25 basis point (0.25%) rate hike at the end of October and a 60% chance of another 25 bp hike in December[3].
Earlier this morning we received the Personal Consumption Expenditures (PCE) report for the month of September. The PCE report is the Federal Reserve’s preferred measure of inflation, and this month’s report showed monthly inflation at 0.3% and annualized inflation at 3.4%. Both of these numbers were slightly lower than the 0.4% monthly and 3.7% annualized inflation that Wall Street analysts were expecting, but it’s also still markedly higher than the Fed’s target of 2% annualized.
Last is the nonfarm payrolls (NFP) report for the month of September, coming this Friday. The NFP report is expected to show the US economy adding somewhere between 50,000 – 100,000 jobs in September:
While it is obviously good for the economy to see jobs increasing, it also gives the Federal Reserve more leeway to raise interest rates without damaging the economy. Oil prices are also rising this week as tensions with Iran re-escalate, potentially adding more fuel to the inflationary fire. Investors have still mostly looked past rates and inflation as corporate earnings continue to break records, but rising yields and interest rates will eventually dampen the stock market unless they are curtailed.
What Else
· President Trump is weighing a ban on diesel exports in an attempt to lower fuel prices
· A British tanker was struck by an “unknown projectile” while passing through the Strait of Hormuz on September 21st
· A federal judge temporarily restored press passes for CNN, MS Now, and Politico while it reviews President Trump’s arguments against banning them from the White House
· A major cold front is preparing to descend on Oklahoma and the rest of the great plains states
· Both OU and OSU are on bye this week
What We’re Reading
NASA’s Lunar Reconnaissance Orbiter discovered a new crater on the moon. The crater, named “McGetchin” after pioneering lunar scientist Tom McGetchin, is believed to have been created in the spring of 2024 and is roughly the size of two football fields. Click below to see before and after photos of the crater and to read how astronomers made this discovery:
What’s Happening Downtown
ARTSPACE at Untitled is hosting their annual Steamroller Printmaking Art Festival this Saturday, October 3rd. This event is runs from 10:00 AM to 6:00 PM and is free to attend. ARTSPACE takes over 3rd Street and uses a steamroller as a printing press, and allows visitors to create their very own prints. This event also features family-friendly interactive art stations, food trucks, and a local artist market along 3rd Street. I actually live on 3rd Street and visit this event every year so make sure to say hello if you see me!
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Bill Daniel, Sam Postich, Jenni Hess, Hannah Hartman
[1] CNBC [2] Investopedia [3] CME Group