Weekly Economic Update – 1-23-2023

Economic Update 1-23-2023 

  • In a shortened week, economic data included weaker results for retail sales, industrial production, and some regional manufacturing activity. Housing sales and starts continued to decline; on the other hand, homebuilder sentiment surprisingly improved.
  • Global equities were mixed to higher last week, due to mixed economic data, but also increased signs of falling inflation and optimism over China’s reopening. Bonds ticked higher as interest rates fell back along most of the yield curve. Commodities also rose with expected higher demand in coming months.
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Weekly Economic Update – 1-18-2023

Economic Update 1-18-2023 

  • Economic data for the week included consumer price inflation that continued to decelerate to close out 2022, but still remains high. Other positive news included jobless claims falling back and an improvement in consumer sentiment.
  • Equities fared well globally last week to continue a winning streak in the new year, thanks to lower inflation and optimism over the current earnings season. Bond prices rose along with falling interest rates. Commodities also gained, helped by a weaker U.S. dollar and stronger crude oil prices.
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Weekly Economic Update – 1-10-2023

Economic Update 1-10-2023 

  • Economic data for the first week of the year included several reports continuing to show a strong labor market, although not as strong as it has been. However, ISM manufacturing fell further into contraction, joined by ISM services for the first time since the pandemic.
  • Global equities gained to start the first week of the year, with foreign outpacing domestic. Bonds also gained as interest rates pulled back on softer implications for inflation and growth. Commodities fell back along with weaker oil prices.
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Weekly Economic Update – 1-05-2023

Economic Update 1-03-2023 

  • Economic data for the week included housing prices that continued a decline from peak levels, as well as a drop in pending home sales. Some regional PMI data improved, while jobless claims remained at a steady low level.
  • Global equities were flat to down last week to close out 2022. Fixed income also fell back as interest rates ticked higher. Commodities gained ground last week, led by crude oil prices.
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Weekly Economic Update – 12-19-2022

  • Economic data for the week included consumer inflation decelerating at a faster degree than expected; however, the Federal Reserve and other global central banks maintained policies of raising interest rates at a fast clip. Retail sales and industrial production both declined, continuing a trend of weaker key economic data, while several regional manufacturing indexes were mixed.
  • Global equity markets fell back along with continued-hawkish central bank language. Domestic bonds, however, gained as long-term rates fell along with slower growth expectations. Commodities were mixed, with crude oil prices moving higher. 
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Fed Note

The Federal Reserve Open Market Committee raised the Fed funds rate today by 0.50%, to a range of 4.25-4.50%. The vote was unanimous, and marks a downshift from a pace of four straight 0.75% hikes. The formal statement language was barely changed from the prior month, offering no new information.

According to the CME Fed funds futures market1, expectations were high (~80%) for a half-percent change, with chances of a larger hike having steadily fallen since the early November meeting. Based on current quarterly probabilities for 2023, the key rate is expected to rise 0.50% by March to 4.75-5.00%, with little change through June, but then drifting lower to a wider range of 4.50-5.00% by September, which implies either a continued pause or even a slight rate cut. The December assumed level has fallen to 4.25-4.50%, which implies further cuts. Probabilities have changed slightly in recent weeks, with a longer expected pause and drop in the terminal rate, with marked calls for easing later in keeping with higher chances of recession over that stretch. All-in-all, futures markets put the terminal rate right around 5.00%, with estimates from private economists running plus or minus a quarter-percent around that level. There remains a decent degree of uncertainty about this; again, with the key variable being how long it takes for inflation to ease enough to satisfy the Fed.

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Weekly Economic Update – 12-12-2022

Economic Update 12-12-2022 

  • Economic data for the week included an unexpected gain in ISM services/non-manufacturing, higher-than-expected producer prices, and an improvement in consumer sentiment.
  • Global equity markets fell back last week, along with higher interest rates; however, Chinese stocks gained with new government measures designed to reopen the economy. Bonds fell back due to rising yields. Commodities were led lower by a sharp drop in crude oil prices.
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Weekly Economic Update – 12-05-2022

Economic Update 12-05-2022 

  • Economic data for the week included an upward revision to Q3 U.S. GDP, higher personal income/spending, as well as a positive surprise from the November employment situation report. These were offset by a decline of ISM manufacturing into contraction, lower home prices, and weaker consumer sentiment.
  • Global stock markets fared positively last week, with foreign outperforming domestic. Bond prices also rose as yields across all maturities fell back; foreign bonds were also aided by a weaker dollar. Commodities gained, due to a rise in prices for industrial metals and crude oil.
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Weekly Economic Update – 11-28-2022

Economic Update 11-28-2022 

  • On a Thanksgiving-shortened week, economic reports included surprisingly positive data from durable goods orders and new home sales, and improvement in consumer confidence, while jobless claims rose a bit.
  • Global developed market equities gained last week, while emerging markets fell back, due to declines in China. Bonds fared positively, as long-term interest rates declined. Commodities fell back, mostly due to a drop in crude oil prices.
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Weekly Economic Update – 11-21-2022

Economic Update 11-21-2022 

  • Economic data for the week included a gain in retail sales, while industrial production fell back slightly, and several housing metrics continued their multi-month declines. Regional manufacturing indexes were mixed, showing sharply divergent results. The Index of Leading Economic Indicators also continued a string of negative readings—signaling higher recession risk.
  • Global equity markets were mixed, with declines in the U.S., emerging markets and Japan, while greater Europe saw gains. Bonds fared decently with mixed interest rate changes across the yield curve. Commodities fell back in keeping with a sharp drop in the price of crude oil last week.
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Weekly Economic Update – 11-16-2022

Economic Update 11-16-2022 

  • Economic data for the week included consumer price inflation coming in still higher relative to history and the Fed’s target, but at a slower pace than last month. The widely-anticipated mid-term elections resulted in a likely divided government, although vote counts were still ongoing by the end of the week. Consumer confidence again fell back, while jobless claims were little changed.
  • Global equity markets experienced a strong week, buoyed by the positive CPI inflation surprise, with foreign stocks especially benefitting from a drop in the value of the dollar. Bonds also fared well as long-term interest rates pulled back. Commodities were mixed, with crude oil lower and metals higher.
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Weekly Economic Update – 11-07-2022

Economic Update 11-07-2022 

  • Economic data for the week included the Federal Reserve continuing its robust pace of interest rate increases—last week again by 0.75%. The ISM manufacturing and services surveys declined, but remained in expansionary territory. Labor reports continued to show positive growth, through nonfarm payrolls and job openings, while the pace of wage growth decelerated a bit.
  • Global equity markets were mixed, with declines in the U.S. but positive returns overseas—notably in emerging markets. Bonds fell back along with several central bank interest rate increases. Commodities rose along with higher energy prices, due to near-term concerns about inventories.
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