Market Summary – August 14, 2023

Last Week’s Summary

  • S&P 500 Index fell 0.27%
  • International Equities fell 0.87%
  • Emerging Markets fell 1.93%
  • U.S. 10-Year Treasury Yield rose to 4.17%
  • Initial Jobless Claims rose to 248k
  • CPI rose to 3.2%; Core fell to 4.7%
  • PPI rose to 0.8%; Core remained flat at 2.4%

What to Watch for This Week

  • T, 8/15/23 Retail Sales, Empire Manufacturing
  • 8/16/23 MBA Mortgage Applications, FOMC Meeting Minutes
  • Th, 8/17/23 Initial Jobless Claims, Leading Index
  • F, 8/18/23 Bloomberg U.S. Eco. Survey

Weekly Market Recap

Equities experienced consecutive weekly losses for the first time since early May. The technology-focused Nasdaq Index faced a 1.9% decline, following a 2.8% loss the previous week. This trend coincided with the market’s digestion of a fresh set of inflation data. Notably, consumer inflation surged for the first time in a year, albeit at the slowest rate of increase since 2021.

The upward movement in inflation was primarily driven by escalating shelter costs, which contributed to over 90% of the monthly upturn, as reported by the Bureau of Labor Statistics (BLS). Conversely, the Consumer Price Index (CPI) core, continued its descent, reaching 4.7%. In light of these dynamics, the market consensus anticipates the Federal Reserve to maintain unchanged interest rates at its forthcoming meeting scheduled for the third week of September.

This decision would bring a sigh of relief to market participants in the hope that we are nearing the end of the rate hiking cycle. However, the market eagerly awaits the release of July’s meeting minutes this Wednesday, hoping to glean any potential dissenting sentiments regarding the prospects of a rate adjustment in September. Treasuries gained ground this week, driven by the sentiment of a temporary pause in rate adjustments.

The 10-Year Treasury Yield recovered all losses from earlier in the week as well as last and finished back above 4.15%. This trajectory positions it on the cusp of pushing to the highest levels in the last decade, recorded at 4.24% in October of last year. Meanwhile, oil recorded its seventh consecutive weekly gain, marking its lengthiest rally since April of the preceding year.

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