Citi Personal Wealth Management

An Unsurprising
September Slump

Monthly Market Snapshot: September 2021

Highlights

As expected, September was a rough months for stocks as investors digested early signs of monetary policy normalization, higher bond yields, and a heavy U.S. legislative agenda. On a global basis, stocks slid 4.3% in the month. In the U.S., the S&P 500 slipped 4.8%, but finished the third quarter with a 0.2% gain (its sixth consecutive quarter of gains). The NASDAQ, which is more sensitive to rising bond yields, fell by 5.3%. Japanese stocks outperformed – rising by 2.1%. The 10-year U.S. Treasury yield jumped 18 basis points from 1.31% to 1.49% by month-end as investors considered a tapering of Fed bond purchases and persistent inflation.

A confluence of events are causing investors to proceed cautiously. Changes appear to be coming on both the monetary policy (the Fed) and fiscal policy front (Congress). The Fed strongly signaled that it would announce a tapering in the pace of its bond purchases in November and Congress is juggling two major infrastructure bills while also trying to raise the debt ceiling.

Citi’s Global Investment Committee (GIC) maintains a 8% overweight in Global Equities with a concentration in Global Healthcare while Fixed Income and Cash is a 8% underweight. The GIC recommends holding 10% of medium-risk portfolios in stocks with consistent dividend growth.