October Trade Rationale

2022 Q3 Market Commentary

Entering the 3rd Quarter, the markets were oversold. Solid company earnings and the hope that inflation/interest rates were peaking, led to a strong rebound in the markets during July and early August. However, “sticky” inflation data and aggressive statements by Federal Reserve led to a reversal and the “bear” market reasserted itself as fears of higher rates and slowing growth overwhelmed the positive bias developed earlier.

During the quarter, the Federal Reserve’s raise-and-hold / higher-for-longer messaging dominated the narrative and markets. For the 3rd Quarter, equity and fixed income returns finished in negative territory with year-to-date returns ending near 52-week lows. The S&P 500 Index, Dow Jones Industrial Average, and Nasdaq Composite delivered their worst performance for the first nine-months of a calendar year since 2002.1 Shares of the iShares Core U.S. Aggregate Bond exchange-traded fund (tracking investment-grade bonds) lost over 5% during the quarter and approximately 15% for the year – their worst performance going back to 2004.2