“This has been a resilient economy… it has been surprising in its resilience.” - Jerome Powell, 11/1/23
Last week's market recap:
- The S&P 500 closed the week up 5.88%. Year-to-date the index is up 15.05%
- NASDAQ closed the week up 6.62%. YTD the index is up 29.64%
- U.S. Aggregate Bond index was up 1.99%. YTD the index is down -.53%
- 10-Year Treasury Rate increased, ending the week at 4.57% down from 5.03% the prior week
- Fed Funds Target rate remains at 5.25-5.50%
- The 1-Year Treasury is yielding 5.31%
- A 6 Month Treasury is yielding 5.48%
The week ahead:
- Earnings: Uber, Disney, Occidental, Rivian, Honda, etc.
- Quarterly report on Household debt and credit
- Consumer sentiment index
What happened at last week’s Fed meeting?
- Fed left rates unchanged as expected.
- Full effects of rate hikes have yet to be felt.
- Policy is currently restrictive.
- Inflation remains elevated. The Fed is still committed to returning inflation to 2%.
- They remain data dependent and will make decisions meeting by meeting.
- Overall, this Fed meeting had a more balanced tone regarding futures rate hikes. Markets rallied.
How can markets rally from here?
- Bond yields need to avoid a surge higher. Slightly higher from current levels may be ok, but the US 10 year treasury above 5% would probably put pressure on equity markets.
- The Fed staying on the sidelines would help. They don’t need to cut, and a hike wouldn’t necessarily tank markets, but remaining on the sidelines would probably be bullish.
- The labor market continues to show small signs of easing.
We’re seeing an uptick in global central banks cutting interest rates:
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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