Risk is decoupled from US fundamentals

The recent repricing of risk appears to be decoupled from US fundamentals. Admittedly, macro profits used in this analysis are derived from domestic production, i.e. do not include foreign profits and therefore exclude the hit to reported earnings from currency translation. 

However, this constitutes an accounting drag which is unlikely to significantly alter domestic expansion and hiring plans. The real effects related to loss of competitiveness will undoubtedly have implications for investment and employment.

"Based on the above analysis,it can be asumed that the recent tightening in financial conditions proves to be short-lived and does not trigger a negative feedback loop into the real economy. This is why still a September rate hike is seen as a strong possibility", says Societe Generale. 

Yet, should the Fed choose to delay policy normalization, we would expect the initial tightening at the subsequent meeting on October 28.