Market Commentary — September 27, 2021

The major U.S. indices overcame an early week sell-off to end the week flat to higher. Monday’s S&P 500 biggest daily drop since May 12 was due to multiple factors.

First off, there were fears that China’s second-biggest property developer and the world’s most heavily in debt, Evergrande, might default. This set off concerns about a global financial contagion similar to the Lehman Brothers collapse in September of 2008. But by Wednesday, a restructuring plan was announced along with a capital injection from the Chinese banking system.

Secondly, there was the two-day Fed policy meeting. As expected, Fed policymakers announced they would soon “consider” tapering central bank purchases of Treasuries and Mortgage-Backed securities, a move that would reduce downward pressure on long-term interest rates. But Fed Chair Powell said that they would be looking at the labor market data before acting.

Also coming out of the Fed meeting was an update to its quarterly forecasts for short-term rates. According to the Federal Open Market Committee’s (FOMC’s) updated Summary of Economic Projections, the timing of an interest rate liftoff is now evenly split between 2022 and 2023. In addition, a majority of officials now anticipate at least 3, 25 basis point rate hikes by the end of 2023, and as many as 6 or 7.

In ETF land, there is speculation that a futures-based Bitcoin ETF could arrive as soon as October. Blackrock is planning to launch a China tech ETF to compete with KraneShares. Goldman Sachs launched a Future Tech Leaders ETF to go head-to-head with ARK’s Innovation Fund. And Amplify ETF, launched BIDS, which invests in online brokers and tracks the BlueStar Global E-Brokers and Digital Capital Markets Index.

Stay tuned for some exciting announcements from EQM land in the coming weeks!

Jane Edmondson
CEO and Co-Founder

About

EQM Indexes LLC is a woman-owned firm dedicated to creating and supporting innovative indexes that track growth industries and emerging investment themes. Co-founded by Jane Edmondson, a former Institutional Portfolio Manager with more than 25 years in the investment industry.

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