Recap and the Week Ahead | Big Week

"For the first time in 13 years, we’ve got a really attractive short-term rate." - Paul Tudor Jones

Last week's market recap:

The S&P 500 was down -3.35% for the week. Year-to-date the index is down -16.17%.
- Large-Cap Value leads performance YTD at -7.03%
NASDAQ closed the week down -3.98% and is down -29.10% YTD.
Barclays Aggregate Bond index is down -11.84% YTD.
10-Year Treasury Rate increased slightly, ending the week at 3.58% from 3.49% the prior week.
- Fed Funds Target rate is 4.00%
The 1-Year Treasury is yielding 4.73%
A 6 Month Treasury is yielding 4.75%
- What is your savings account rate?

The week ahead:

CPI (Inflation numbers)
Fed Meeting
Retail Sales Data

Quick Comments:

Big Week as we start to close out the year.

Tomorrow (8:30am EST), we get the November CPI report. Market expectations are for a 0.3% increase in both the headline and core measures, which would bring the year-over-year inflation rates to 7.3% and 6.1%.

Wednesday (2pm), The Fed’s interest rate decision and press conference. Markets expect the Fed will still slow their pace of rate hikes to 50bps. It is likely they will maintain a higher-for-longer policy messaging. We need economic normalization and falling inflation pressures before the Fed pauses their tightening program.

Thursday, we get retail sales data. Earnings expectations have been falling. Depending on how this week’s data falls, we could be in for a very volatile week. Plus, we’re also in the final weeks of tax loss harvesting. So there will be a percentage of buys and sells that have nothing to do with fundamentals.

The market changes. It’s a completely different environment now vs the start of 2022. We’ll be entering 2023 with extremely attractive short term rates. This could serve as a solid foundation for good returns for both stocks and bonds after a very difficult 2022.

Source: BlackRock

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

Best,

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://www.blackrock.com/corporate/literature/market-commentary/weekly-investment-commentary-en-us-20221212-dont-be-tempted-by-the-old-playbook.pdf

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