Upcoming Volatility Will Create Opportunities

Rising oil prices amid Middle East tensions and supply disruptions threaten to overshadow positive inflation data and heighten market volatility. I expect the Fed to remain on hold at its September meeting, given manageable core inflation and recent economic resilience. If 10-year yields approach 5%, a 3-5% S&P 500 drawdown is likely, with expensive growth stocks most at risk. Volatility should create opportunities in interest-rate sensitive sectors, as long-term yields are likely to peak near 5% if economic expansion endures.

Stocks struggled yesterday, as oil prices climbed again with tensions in the Middle East increasing, yet bond yields behaved, despite rising concerns about inflation. Reports indicate the U.S. bombed energy infrastructure targets on Kharg Island, while the Houthis attacked sites in Saudi Arabia, which halted oil production