Weekly Recap | Busy Week Ahead | "Trust Dogs and the Bond Market"
“I trust dogs and the Bond Market.” –Many dog loving successful investors
Last week's market recap:
- The S&P 500 was up 2.57% for the week. Year-to-date the index is down -16.17%.
- Large-Cap Value leads performance YTD at -10.14%
- NASDAQ closed the week up 3.33% and is down -24.03% YTD.
- 10-Year Treasury Rate decreased, ending the week at 2.75% from 2.92% the prior week.
- The 1-Year Treasury is yielding 3.05%
- Fed Funds Target rate is 1.75%
The week ahead, 7/25:
- Fed Meeting
- Corporate Earnings (Big Tech: Google, Microsoft, Meta, Amazon, Apple)
- US GDP
- European inflation and GDP
- US PCE
Quick Comments: Bear markets offer an opportunity for future returns. Investor top concerns have been shifting from inflation to recession. This is good, as long as the market’s expectation of peak inflation holds up. You can see this by looking at the bond market. The 1-Year treasury is yielding 20bps more than the 10-Year Treasury. The Fed controls the front end of the curve. The market controls the long end of the curve. Trust the bond market. The bond market is telling the Fed, “You can raise short term rates, but you’re hurting economic performance, so long term rates will be lower." The stock market historically does very well when the 10-Year yield is decreasing. The chart below shows the S&P 500 and the 10-Year treasury yield. They are inversely correlated in the short term with the S&P 500 rising as yields fall.
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®
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