- US stocks and bonds finished the turbulent month of August lower as traders rebalanced rate-hike expectations after central banks around the world vowed to step up their anti-inflationary efforts.
- Every major US index had its worst month since June.
- Federal Reserve officials have recently dashed hopes of a dovish pivot, fueling bets that this year's bear market is over. Since then, investors have been sifting through sometimes contradictory economic data in search of additional policy cues. While job openings data on Tuesday highlighted labor market tightness, revised ADP data on Wednesday revealed that companies increased headcount at a relatively slow pace in August. All eyes will be on Friday's job report for more clues about the central bank's strategy.
- Inflation in the eurozone has accelerated to an all-time high, bolstering the case for the European Central Bank to consider a jumbo interest-rate hike when it meets next week. Joachim Nagel, a member of the ECB's governing council, called for a "strong" reaction. Money markets have now priced in 125 basis points of ECB tightening by October, implying a half-point hike and a three-quarter point increase in the spread between the ECB's next two policy decisions.
