We enter the week with equities flat to down. This comes after the Fed's hawkish pause last week causing investors to readjust expectations on the path of rates. The bond market selloff entered its fourth week as the 10-year treasury yield breaks past 4.5%, the highest level since 2007.

Although September is already a weak month seasonally, markets are facing many headwinds. On the index level, we are watching the August low as support, which is under threat. If we accelerate lower, we could start to see more sellers come out of the woodwork.

Newton scores are still weak as defensive parts of the equity markets are leading. Value is edging out growth. The short end of the Treasury curve looks relatively more attractive as interest rates climb higher. Defensives and Staples are the highest-graded sectors while Cyclicals lag the most.

On the economic front: It is a lighter week, with a very important PCE report on Friday. The data print should shed more light on the Fed's confidence in softening price pressures. This inflation read is the Fed's preferred gauge and it likely grew at a 0.2% pace versus the prior 0.5% pace. YoY the estimate is for 3.9% vs. 4.2% the prior month.