Category: Weekly Updates

Weekly Updates

Financial News and Portfolio Management Discussion through September 24th

US stocks sharply declined for the second consecutive week, as aggressive moves by Central Banks have increased investors’ recession concerns. The S&P 500 declined by 4.6% and the Dow was lower by 4.0% for the week. Foreign markets also declined sharply with the FTSE All World Ex US down 5.1% for the week. US crude fell to $78.74 to end the week, down from $85.11 the week prior. The yield on the 10-year Treasury ended the week at 3.70%, its highest level since 2009, up from 3.45% the week prior.

Fed officials voted unanimously to increase the federal-funds rate by 0.75% to a range between 3% and 3.25% and signaled additional large increases were likely even though they are raising the risk of a recession. New projections show the rate rising to between 4% and 4.5% by the end of the year, which would call for sizable rate increases at the November and December meetings. Fed Chairman Jerome Powell said, “We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t”.

The U.S. housing market slowed for a seventh straight month in August, as higher mortgage rates continued to weaken buyer demand.

The Bank of England raised its key interest rate by 0.5% to 2.25% marking the seventh consecutive increase. A few members of the Bank of England’s monetary policy committee voted for a larger 0.75% increase while one voted for a smaller 0.25% rate rise. The split vote highlights the competing concerns of historically high inflation and pushing the economy into a recession.

Many Central Banks around the world increased their benchmark rates, some by larger-than-expected margins, to combat the effects of rising inflation. Sweden raised rates by a larger-than-expected 1% to 1.75%. Norway raised its benchmark rate by 50 basis points to 2.25%. The Swiss National Bank (SNB) raised its policy rate by 0.75% from negative 0.25% to 0.5%.

The U.K. government announced the country’s largest tax cuts since the early 1970s, as well as an increase in spending on subsidies to cope with a surge in energy prices.

Financial News and Portfolio Management Discussion through September 17th

US stocks sharply declined for the week, as September’s CPI report showed inflation is running hotter than expected. The S&P 500 fell by 4.7% and the Dow was 4.1% lower for the week. Foreign markets declined with the FTSE All World Ex US down 2.7% for the week. US crude was lower for the week ending at $85.11 per barrel, down from $86.79 the week prior. The yield on the 10-year Treasury ended the week higher at 3.45% up from 3.32% the week prior.

CPI rose 8.3% in August from the same month a year ago, above the 8.1% forecasted, but down from 8.5% in July and from 9.1% in June. Core CPI, which excludes energy and food prices, increased 6.3% in August from a year earlier, higher than the 6.1% expected and above the 5.9% rate in both June and July. On a monthly basis, core CPI rose 0.6% in August, above the 0.3% increase expected and double the increase from July.

Mortgage rates rose above 6%, their highest level since 2008, more than double the rate from a year ago.

The railroads and union leaders reached a tentative labor deal to avoid a nationwide strike.

Financial News and Portfolio Management Discussion through September 10th

US stocks gained for the week, posting their first weekly gains in a month, as investors looked ahead to September’s CPI report expecting to see the start of a trend down. The S&P 500 gained 3.6% and the Dow was up by 2.7% for the week. Foreign markets were also positive with the FTSE All World Ex US up 0.7% for the week. US crude was relatively flat for the week ending at $86.79 per barrel, down from $86.87 the week prior. The yield on the 10-year Treasury ended the week higher at 3.32% up from 3.19% the week prior.

The ECB increased its key rate by 0.75%, following the 0.50% increase in July, and signaled further rises were likely over the coming months. ECB President Christine Lagarde warned that inflation was spreading beyond energy and said the ECB was ready to increase rates aggressively over the next several meetings.

Federal Reserve Chairman Jerome Powell made comments at a virtual conference hosted by the Cato Institute that the central bank is squarely focused on bringing down high inflation. “It is very much our view, and my view, that we need to act now forthrightly, strongly, as we have been doing, and we need to keep at it until the job is done.”

Russia’s state-owned energy company, Gazprom, halted all exports via the Nord Stream 1 pipeline, citing maintenance work that would halt flows for three days. However, Gazprom on Friday cited an oil leak for the indefinite shutdown of the pipeline.

Financial News and Portfolio Management Discussion through September 3rd

US stocks continued to sell off last week, as comments from Fed Chairman Powell from the week prior put recession concerns back in focus. The S&P 500 dropped 4.0% and the Dow fell by 4.2% for the week. Foreign markets also fell sharply with the FTSE All World Ex US down 3.2% for the week. US crude declined for the week ending at $86.87 per barrel, down from $93.06 the week prior. The yield on the 10-year Treasury ended the week higher at 3.19% up from 3.03% the week prior.

US employers added 315,000 jobs in August slightly below the 318,000 projected and well below the 526,000 added in July. The unemployment rate increased to 3.7% from 3.5% in July. Wages also rose with average hourly earnings up 5.2% from a year ago.

Eurozone inflation hit a record high in August with consumer prices up 9.1% from a year earlier, an increase from the 8.9% recorded in July. Core inflation, which excludes food and energy, increased to 4.3% in August from 4% in July.

Financial News and Portfolio Management Discussion through August 27th

US stocks sold off sharply on Friday, as comments from Fed Chairman Powell showed the Fed planned to continue to be aggressive with fed funds rate increases to reduce inflation “until they are confident the job is done.” The S&P 500 dropped 4.0% and the Dow fell by 4.2% for the week. Foreign markets were also lower with the FTSE All World Ex US down 1.1% for the week. US crude was up for the week ending at $93.06 per barrel, up from $90.77 the week prior. The yield on the 10-year Treasury ended the week higher at 3.03% up from 2.99% the week prior.

Headline personal consumption expenditures price index, the Fed’s preferred inflation measure, increased 6.3% year over year in July, down from 6.8% in June. On a monthly basis, headline PCE was down 0.1%, the first decline since April 2020. Core PCE, which excludes food and energy prices, increased by 4.6% year over year in July, less than the 4.8% increase expected. Personal income grew by 0.2% and consumer spending rose 0.1% in July.

The US Commerce Department revised the second quarter US GDP from contracting by 0.9% to a 0.6% decline.

The average rate for a 30-year fixed mortgage increased to 5.55% this week, nearly double the rate from a year ago.

Saudi Arabia and other oil-producing nations have suggested cutting crude production which could push the price of oil higher.