Weekly Economic Update

Economic Update 2-22-2022

  • Economic data for the week included retail sales that came in higher than expected, as well as gains in industrial production, mixed regional manufacturing sentiment and housing metrics, and a slight pullback in the index of leading indicators.
  • U.S. and foreign equity markets fell back last week, as tensions over Russia and Ukraine wavered (generally rising), in addition to continued strong U.S. inflation rhetoric. Bonds were mixed, with yields little changed, but credit spreads widened. Commodities were also mixed, with gains in metals offset by a pullback in oil prices by several percent.

U.S. stocks were again largely driven back-and-forth by concerns and uncertainty over the Russia-Ukraine conflict, as well as additional comments from St. Louis Fed President Bullard that a full 1% in rate hikes would be appropriate by summer. Nearly every sector was in the negative last week, led by communications and energy, down by around -3%; consumer staples was the only positive sector, rising a percent for the week, with strong results from Walmart and Procter & Gamble in particular. Real estate also fell back by nearly -2%.

Foreign stocks fell back across the board, to about the same or slightly lesser degree than U.S. equities, with the Russia-Ukraine issue remaining the primary focus (especially due to the close proximity and effect on trade and natural gas markets). Emerging markets were mixed, with gains in India and Brazil offset by mixed results in China, and declines in Russia, due to negative sentiment surrounding possible war (and sanctions). Mexican stocks were also held back by economic weakness, as well as an unexpected and brief U.S. ban of avocados from a certain region (now resolved).

U.S. bonds fell back again last week by a fraction of a percent, with little change in treasury yields, offset by wider spreads for corporate credit. International bonds were mixed, with developed markets down and emerging markets experiencing sharper gains.

Commodities were mixed, as gains of several percent in both industrial and precious metals were offset by a decline in energy. The price of crude oil fell back by over a percent to just above $90/barrel, while natural gas prices rose by 11%. While the Russia-Ukraine tension has kept price pressure higher, further work towards a U.S.-Iran nuclear deal and the potential for the addition of their production, kept conditions in check somewhat.

Have a good week.

Period ending 2/18/20221 Week (%)YTD (%)
DJIA-1.77-5.97
S&P 500-1.52-8.57
NASDAQ-1.73-13.32
Russell 2000-1.00-10.42
MSCI-EAFE-1.86-4.20
MSCI-EM-0.670.07
Bloomberg U.S. Aggregate-0.24-3.68
U.S. Treasury Yields3 Mo.2 Yr.5 Yr.10 Yr.30 Yr.
12/31/20210.060.731.261.521.90
2/11/20220.361.501.841.922.24
2/18/20220.351.471.821.922.24

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product. 

FOR ADVISOR USE ONLY – NOT FOR DISTRIBUTION TO THE PUBLIC WITHOUT PRIOR APPROVAL FROM YOUR RESPECTIVE FIRM’S COMPLIANCE DEPARTMENT

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