The resilience of the U.S. economy will likely be a continuing theme in the months to come, as will be the Fed’s timing (the Fed elected to hold interest rates steady at the first Federal Open Market Committee meeting of the year on January 31st). Here are 3 things you need to know: The S&P 500 recorded new highs and was up +1.59% in January. The Magnificent 7 accounted for 45% of the...
The excitement about potential cuts to interest rates continued in the markets and investors had much to cheer as the year closed out with the S&P 500 index approaching its all-time high (4797 level). Here are 3 things you need to know: Gains in the broader market were largely driven by the “Magnificent 7” (Alphabet, Amazon, Nvidia, Meta, Apple, Tesla, and Microsoft). They accounted for...
The boogie man (i.e., the Federal Reserve) showed up early rather than waiting for Halloween and major stock and bond market indices were down for the month keeping the historical pattern typically seen during September intact. Here are 3 things you need to know: The S&P 500 index closed the month down 4.87% - its worst month since December 2022 and the fourth year in a row that the index...
Most global assets were down on the month. The general weakness in the month came from a few different angles. Here are 3 things you need to know: 10-yr. U.S. Treasury yields hit their highest level (4.36%) since 2007 driven partially by a larger-than-expected Treasury supply announcement. Fitch downgraded U.S. government debt from AAA to AA+. China's property crisis is rippling through its...
The U.S. stock market climbed the proverbial wall of worry in May. The month started with fresh rounds of concern about U.S. regional banks (First Republic closed on May 1st), another rate hike by the Federal Reserve in the middle of the month, and intense negotiations around the U.S. debt ceiling towards the end of the month. Here are 3 things you need to know: Technology stocks surged amidst...
Wall Street closed out a winning April after more companies said their profits at the start of the year weren’t as bad as expected. Here are 3 things you need to know: US real GDP rose 1.1% annualized in the first quarter, 0.8% below consensus expectations. While below expectations on the surface, a deeper look reveals a degree of underlying resiliency. Much of the slowdown can be attributed to...
Despite the banking-sector turmoil seen in March, the S&P 500 rose in March, helped by strong returns from growth stocks that were buoyed by falling bond yields. Here are 3 things you need to know: The Federal Reserve continued to hike interest rates by 25 bps in March bringing the Federal funds rate range to 4.75% to 5.00%. U.S. Fed Chair Jerome Powell admitted, the current bank stress will...
There was a big repricing of inflation expectations over February, as the January Consumer Price Index (CPI) showed an uptick in inflation and the January Jobs report was much stronger than expected. Here are 3 things you need to know: 2yr U.S. inflation breakevens were up +85 basis points (bps) to 3.18%, having ended January at just 2.33%. This was the second largest monthly move higher since...
Overall, January continued the strong bounce back seen for most global assets since October even if the performance seen in the first half of the month wasn’t quite matched in the second half. It was still the best January in several years for many assets. Here are 3 things you need to know: Q4 2022 Gross Domestic Product (GDP) came in above expectations at 2.9%. The increase primarily...
2022 is not a year on which I shall look back with undiluted pleasure. In the words of one of my more sympathetic correspondents, it has turned out to be an 'Annus Horribilis'. May the New Year 2023 be more prosperous. Here are 3 things you need to know: The S&P 500 index was off (-19.4%), the worst yearly decline since 2008.Long-term treasuries were down (-30%) as interest rates rose the...
Christmas came early this year for the markets. The idea that falling inflation could mean that the end to the rate hiking cycle is not far off gave both stocks and bonds a boost. Here are 3 things you need to know: The October consumer price index (CPI) showed prices rose 7.7% from a year ago and 0.4% from the prior month, according to the Labor Department, both below expectations. Prices of...
Although this year has felt spooky, the U.S. stock market rallied in October after enduring several straight months of losses, leading to optimism that the end of the bear market may be in sight. Here are 3 things you need to know: The S&P 500 ended the month up 8%. Ten of the 11 sectors of the S&P 500 rose during the month, with energy stocks leading the way higher.Gilts (a UK...
Investors bought the dip in July on hopes the Federal Reserve is about to change course and relax policy before inflation has even peaked. Here are 3 things you need to know: July was the best month for the S&P 500 since November 2020, when the first vaccine trial results were reported.High yield corporate bonds returned +5.9% in July (total return), the strongest monthly performance since...
From the end of the Global Financial Crisis in 2009 until now, the combined balance sheets of the Fed, European Central Bank and the Bank of Japan grew from approximately $5.3 trillion to over $23.7 trillion.(1) The markets were awash in liquidity over the past decade, and the rising tide lifted virtually all financial assets. Central banks around the world are on track to hike rates more than...
The Fed Funds futures market is pricing in roughly 10 quarter-point rate hikes this year. The benchmark 10-year yield was up +56 basis points for April. 2022 so far has seen the worst total return start for the 10-year Treasury (or proxies) since 1788, just before George Washington’s presidency. It appears that much of this tightening cycle has already been priced into the bond market – even...
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