September Stock Market Pain Predicted as Dollar Gains

The dollar is expected to continue strengthening as bond yields rise, potentially leading to lower equity valuations. Economic data released this week, including job reports and inflation rates, will heavily influence Federal Reserve policy decisions and impact the direction of the dollar and interest rates. Stronger-than-expected data could push longer-term rates higher, widening the spread between equity valuations and bonds, potentially leading to lower equity valuations. The combination of a stronger dollar and higher rates may tighten conditions and lead to lower equity prices.