What Could Shake Up Markets in September?

Summary

Andrew Sheets discusses September catalysts that could raise market volatility, including the Fed and other central bank meetings, heavy capital markets activity, and global energy pressures. He highlights Morgan Stanley's raised oil forecast to about $100 per barrel in the fourth quarter. He also argues that expected volatility in interest-rate and foreign-exchange markets remains unusually low and can rise.

• September historically tends to be more volatile than average, while realized volatility over the summer was unusually low.
• The Fed's September 16 meeting is a key catalyst; markets price roughly two-thirds odds of a rate hike, with BOJ and ECB meetings also scheduled.
• September may see unusually heavy capital markets activity due to a growing IPO pipeline and AI-related construction funding.
• Morgan Stanley's commodity team raised its oil forecast to about $100 per barrel in Q4, citing restricted energy flows and inventory drawdowns.
• European diesel prices have risen 140% since January, adding to energy-market pressure.
• Andrew Sheets expects expected volatility in interest-rate and FX markets to rise from unusually low levels.