facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
Market Recap and Week Ahead - Debt Ceiling Thumbnail

Market Recap and Week Ahead - Debt Ceiling

What is bad for American workers and consumers may not, in the end, be bad for American investors.  Whether we end up in recession or not in 2023, we are likely to emerge from this year with a slow-growing, low-inflation economy in 2024.  - David Kelly: Chief Global Strategist at J.P. Morgan


Last week's market recap: 

  • The S&P 500 closed the week down -.65%.  Year-to-date the index is up 3.55%
  • NASDAQ closed the week up .55%.  YTD the index is up 6.47%
  • U.S. Aggregate Bond index was up .15% for the week.  YTD the index is up 2.89%
  • 10-Year Treasury Rate decreased a basis point, ending the week at 3.48% down from 3.49% the prior week.
  • Fed Funds Target rate is 4.50%
  • The 1-Year Treasury is yielding 4.71%
  • A 6 Month Treasury is yielding 4.84%  
    • The 6 month Treasury has a higher yield vs the 1 year and beyond.  This is the bond market telling the Fed, “The economy is not strong enough to sustain these higher rates much longer.”
    • If your savings account is still under 1%, you may want to find a new savings account.  

The week ahead:  

  • Busy week of earnings: Microsoft, J&J, Tesla, Verizon, Boeing, Visa, etc.
  • PCE Index – Personal Consumption Expenditures (Inflation data)
  • 1st estimate of Q4 GDP (Recession data)
  • Pending Homes Sales   

Debt Ceiling:

Congress needs to continuously pass laws to raise the debt ceiling if we want the government to borrow more than the maximum amount passed by law.  Over and over and over again.  The debt ceiling has been raised more than 100x since World War II, and 22x in the past 25 years.  In the last 10+ years, it’s been increasingly used as a political weapon or bargaining chip by attention seeking politicians on both sides of the isle.  A U.S. sovereign default or even downgraded debt would obviously not be good for global financial markets.  The political theater surrounding the debt ceiling is certainly a risk to global financial markets, but it is usually avoided in the final hour.  Expect headlines to increase (and potential volatility) until the debt ceiling is increased.           


Economy:  Hard or Soft Landing?:

Bull Case:

  • Fed will pause soon
  • Peak dollar
  • China Reopening
  • Inflation easing
  • Earnings stronger than expected

Bear Case

  • Fed continues to hike
  • Sticky inflation
  • Lagging effects of rate hikes
  • Earnings contraction

Fixed Income yields are attractive again.  This should provide a solid foundation for diversified portfolios going forward.  Equities can certainly go lower from here.  Consensus seems to be that equities will have a volatile first half of the year followed by a stronger second half of 2023.  Bonds are better positioned to once again provide a solid foundation for diversified portfolios.


2023 Financial Planning Notes:

  • Later age for RMDs
  • Bigger contribution limits on retirement accounts
  • Higher income limit for Roth IRA contributions
  • Increased Standard Deductions
  • Higher Marginal Tax Bracket Thresholds
  • 529 rollovers to Roth IRAs (requirements need to be met)
  • Higher threshold for 0% long-term capital gains

As always, let us know if you have any questions.



CRA Investment Committee 


Matt Reynolds CPA, CFP®

Tom Reynolds, CPA 

Robert T. Martin, CFA, CFP®

Gordon Shearer Jr., CFP® 

Jeff Hilliard, CFP®, CRPC®

Joe McCaffrey, CFP® 

* https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/

Important Disclosure Information

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CRA Financial, LLC [“CRA]), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CRA. Please remember to contact CRA, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. CRA is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of CRA’s current written Disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.crafinancial.com. Please Note: If you are a CRA client, please advise us if you have not been receiving account statements (at least quarterly) from the account custodian. 

Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your CRA account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your CRA accounts; and, (3) a description of each comparative benchmark/index is available upon request.

Please Note: Limitations: Neither rankings and/or recognitions by unaffiliated rating services, publications, media, or other organizations, nor the achievement of any professional designation, certification, degree, or license, or any amount of prior experience or success, should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if CRA is engaged, or continues to be engaged, to provide investment advisory services. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Rankings are generally limited to participating advisers (to the extent applicable). Unless expressly indicated to the contrary, CRA did not pay a fee to be included on any such ranking. No ranking or recognition should be construed as a current or past endorsement of CRA by any of its clients. ANY QUESTIONS: CRA’s Chief Compliance Officer remains available to address any questions regarding rankings and/or recognitions, including the criteria used for any reflected ranking.