Despite the conflict in Israel, markets rallied early last week, and the potential for added turmoil in the Middle East had not had any measurable impact on the markets through the middle of the week.

The month of September is historically a rough month for markets — and this year was no exception. Rising gas prices and high mortgage rates weighed on markets throughout the month. Then the prospect of a potential government shutdown pulled stocks down even further last week.

Now that summer is winding down and we’re beginning to look forward to the fall, the overall mood (and the weather) needs an adjustment. Markets are in a mood and have begun to traffic in rumor and innuendo with the combination of a dismal news cycle, scant data, higher gas prices and stubborn inflation.

Markets have priced in two more hikes, a brief pause and then cuts. But what the markets have overlooked is the possibility of rates staying “higher for longer,” which is beginning to be a more likely possibility.