2025/09 Market Situational Awareness
September Market Review: Volatility Rises as Financial Conditions Tighten
Risk assets experienced heightened volatility amid tightening financial conditions, as equity markets reflected a reassessment of growth expectations and policy persistence. Dispersion across sectors and factors increased, with defensives and quality demonstrating relative resilience while rate-sensitive and high-beta exposures lagged.
Macro signals pointed to late-cycle dynamics, with moderating growth momentum and still-elevated inflation reinforcing a restrictive policy bias. Rates markets continued to price higher-for-longer outcomes, supporting the U.S. dollar and compressing equity risk premia, while tactical opportunities emerged from oversold segments and cross-asset dislocations.
