With the summer doldrums behind us, September has come bursting onto the scene.
From a week over week stand point markets were little changed, however, volatility day to day was much different.
What pushed markets into high gear?
August tends to be a month of low volume and low activity; as a result, when we move into September, market participation tends to spike. As noted by the chart below, volumes since the beginning of September have moved up. The average daily volume in August was 3.76M on the S&P 500. So far in September it has been 4.73M and just last week volume averaged 5.45M[1].
What else caused volatility?
In addition to volume, we have seen a considerable slide in economic activity which has shifted the landscape for Federal Reserve Board (FRB) action. This has caused a shift in flows.
Additionally, we have seen rates begin to rise in the Eurozone. Some would call this a crisis in faith in the European Central Bank (ECB) and Bank of Japan’s (BOJ). Specifically, their ability to stimulate their respective economies. Typically rates head north in a strengthening economic environment, which neither country has shown strength. Rather, they are moving in response to ECB and BOJ meetings that have yielded in action and uncertainty, rather than further stimulus.
Conclusion
Recent ebbs and flows are normal for September, but sometimes hard to stomach. Stay the course as one month does not make or break a long term portfolio.
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