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Monthly Market Snapshot: September 2020

A monthly update on equity, fixed income, currency, and commodity markets.

Views expressed are those of the authors and are subject to change. Other teams may hold different views and make different investment decisions. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional or institutional investors only.

Equities

Global equities (-2.7%) fell for the first time in six months, ending with a 1.6% year-to-date gain. Markets contended with an escalation in COVID-19 cases and indications that the global economic recovery has moderated. The worldwide death toll from the pandemic eclipsed one million, with infections escalating in Europe, the US, India, and Latin America. Europe faced an alarming rise in cases as the number of new infections reached record highs in some countries. The US grappled with political uncertainty around the upcoming presidential election and the lack of additional fiscal stimulus. Economic indicators signaled a robust rebound in China’s economy, although tensions with the US continued to mount as the US government imposed new restrictions on Chinese technology companies. Brexit negotiations deteriorated after a controversial bill, which could override elements of the Brexit Withdrawal Agreement, passed its first parliamentary hurdle in the UK’s House of Commons.

US equities (-3.8%) declined for the first time in six months. Large-cap technology companies, which had been key drivers of the market’s powerful rally from its March lows, fell sharply at the beginning of September amid concerns about crowded positioning and stretched valuations. Ongoing concerns about the pandemic weighed on the broader market despite optimism about the progress of vaccine trials. Democratic and Republican lawmakers failed to break an impasse on a fifth fiscal aid package, with both sides remaining divided on the package’s size and scope. The US Federal Reserve (Fed) signaled that it will hold interest rates near zero until inflation is on track to moderately exceed 2%. The Fed stressed the need for additional fiscal support and upgraded its economic growth forecast for 2020 to -3.7%, from -6.7% in June, indicating that it expects the US economy to accelerate amid a faster-than-expected decline in unemployment.

Democratic nominee Joe Biden held a steady lead over President Donald Trump in the polls ahead of November’s presidential election. Markets confronted the specter of heightened volatility and political turmoil in the coming months amid uncertainty about…

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