Equity markets charged ahead in September, reaching all-time highs, thanks to a broad-based rally that saw 8 out of 10 sectors end the month higher. It was a welcome reprieve from more typical recent September market performance, as the past four Septembers have been decisively negative across North American equity markets (Figure 1).

Figure 1: September Returns were poor between 2020-2023

Source: MWG, Refinitiv Workspace

Markets are looking for further evidence of a soft landing, a scenario where employment remains strong and inflationary pressures fade. Under this scenario, The U.S. Federal Reserve could maintain a measured pace in lowering overnight funding rates, slowly taking its foot off the economic brake pedal but finding some comfort in inflation expectations l remaining subdued. The September U.S. jobs market update highlighted a slight rebound in labour conditions as evidenced by the unemployment rate falling from 4.2% to 4.1%.