September 2024
Summary
Markets rallied across the board in September as the Federal Reserve made good on a well-telegraphed rate cut, trimming the Fed Funds rate by 50 basis points. The 2-year Treasury rate dipped below the 10-year yield for the first time since the summer of 2022, U.S. stocks marched higher, and the dollar weakened, providing a boost to foreign markets.
Equities
U.S. stocks continued to climb higher in September, with the realization of a Fed pivot, resulting in a brief profit-taking pause, followed by steady gains to close the month 2% higher. Small caps and developed international stocks saw modest gains while a late-month boom in Chinese stocks boosted the emerging markets index returns 6.7%.
Fixed Income
Fixed income markets saw positive returns thanks to a rates-driven tailwind. U.S. interest rates eased in September with the long-anticipated Fed rate cut, unwinding a longstanding yield curve inversion. While the 10-year Treasury yield shifted a fairly moderate 12 basis points lower, short rates saw declines near 40 basis points from August levels. Credit spreads remained rangebound and high yield outperformed investment grade bonds.
1 – Russell 1000, 2 – Russell 2000, 3 – MSCI EAFE, 4 – MSCI Emerging Markets, 5 – Bloomberg US Agg, 6 – Bloomberg US Long Gov/Credit
7 – Bloomberg US Corporate High Yield, 8 – Bloomberg Gold Subindex, 9 – Bloomberg Commodity
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