I like large parties. They’re so intimate. At small parties there isn’t any privacy.” - F. Scott Fitzgerald - The Great Gatsby
Last week's market recap:
- The S&P 500 closed the week up 2.53%. Year-to-date the index is up 24.89%
- NASDAQ closed the week up 2.86%. YTD the index is up 42.70%
- U.S. Aggregate Bond index was up 2.16%. YTD the index is up 4.88%
- 10-Year Treasury Rate decreased sharply, ending the week at 3.91% down from 4.23% the prior week
- Fed Funds Target rate remains at 5.25-5.50%
- The 1-Year Treasury is yielding 4.97%
- A 6 Month Treasury is yielding 5.34%
- The bond market is expecting rate cuts to occur in 2024.
The week ahead:
- Q3 Real GDP
- Housing Data
- Corporate Earnings: Nike, FedEx, CarMax, etc.
- PCE (Inflation Date)
Last week, the Fed hinted at rate cuts and financial markets partied. Small caps ripped. The Dow is at an all-time high. S&P increased sharply. The Nasdaq popped. Bonds rallied. Wall St is feeling good going into year end, but there is a lot going on within this big party…
- The futures market is pricing in 1.75% of rate cuts in 2024. That seems aggressive. How will markets react if we don’t get as many cuts?
- The futures market has also increased the odds of a rate hike in 2024! So if/when we get rate cuts, the odds of hikes may actually increase.
- Even though inflation data is easing, is it too soon to claim victory on inflation?
- Did equities just pull forward 2024 returns? The S&P 500 is up over 15% in the past 6 weeks! Long term bond (TLT) is up over 21% in the past 6 weeks!
- Oil has been lower. This feels good at the pump, but is this a sign of global economic slowing?
We’re happy with the recent rally. Markets seem to be normalizing. Bonds have real yields. Cash may no longer be king. Equity leadership seems to be broadening. We’re closer to good news being good news.
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®
Phillip Tompkins, CFP®
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