Market Commentary

September 9, 2022

Minutes from the July Federal Open Market Committee meeting and a subsequent speech by Fed Chair Powell quashed the market’s “peak Fed hawkishness” narrative in mid-August, ending the two-month-long rally.  Investors had hoped flagging economic growth would trigger a monetary tightening rethink.  However, the Federal Reserve continues to affirm its hawkish bias, raising investor fears of a possible recession-inducing/deepening policy error.  In his Jackson Hole Economic Symposium speech, Powell stated that “restoring price stability will likely require maintaining a restrictive policy stance for some time.”  As a result, the fed fund futures curve shifted back up and currently implies a peak rate of about +4.0 percent by early 2023.  Still, we believe economic and financial market pressures could force the Federal Reserve to pause rate hikes by the end of 2022 if inflationary pressures continue to ease.

Federal Reserve comments and anticipated policy actions will remain top of mind for financial markets, with any positive economic data that may embolden monetary hawks viewed unfavorably by investors.  Fortunately, consumer inflation is poised to wane in the coming months, providing the Federal Reserve with some breathing room and stock markets with another opportunity to rebound.  However, investors will also likely enter the September quarter corporate earnings reports with some trepidation as slowing global growth, strengthening U.S. dollar, tight labor markets, and, in some instances, excess inventories take a toll.  Nonetheless, market dislocations are providing attractive opportunities for stock picking.

Regarding portfolio strategy, we expect market volatility to remain high near term as investors grapple with monetary tightening, the global economic slowdown, decelerating corporate earnings growth, and accumulating geopolitical risks.  Given the wide range of potential economic outcomes, portfolios remain well diversified across sectors with a quality bias.

For our latest full Global Investment Outlook & Strategy Update, download the .pdf document.

Sit Mutual Funds was the Barron’s #1 fund family of 2021

In its 2022 annual Best Fund Families article, Barron’s named Sit Mutual Funds as the top fund family. Barron’s measured manager skill across five fund categories. The complete list of ranked fund families is available online.

2022 Investment Seminars

Sit Mutual Funds will be offering three different investment seminars this summer.  For content and date information please visit the 2022 Seminar page.