Weekly Market Report: November 10th, 2023

In a rather uneventful week last week, equity markets added incrementally to the extraordinarily strong performance the week prior. The S&P 500 tacked on 1.3% thanks to strong performance from mega cap technology names which took year to date gains back to 15%. Other equity asset classes didn’t fare as well last week with small caps (-3.15%), developed international (-0.80%) and emerging markets (-0.29%) all in the red. The big bond market rally took a breather last week with some weakness in the belly of the curve (2y-5y). Commodity markets went the way of WTI oil last week, both down 3%-4% while the USD enjoyed a slight rebound, closing up 0.80% on the week.

Market Anecdotes

  • Economic risks have decreased marginally thanks to the recent sharp decline in developed market bond yields which feeds both trade and risk appetite globally.
  • Third quarter earnings season is drawing to a close, currently on pace for 4.1% earnings growth, with results coming in handily above expectations. Fourth quarter consensus is calling for 3.2% but 2024 estimates are currently at 6.7% for Q1 and 10.5% for Q2.
  • Nineteen FOMC speaking engagements last week were punctuated by some hawkish comments from Jerome Powell who made it clear that policy may not yet be sufficiently restrictive and additional hikes are not off the table.
  • An abnormally weak 30yr UST auction contributed to market anxiety later in the week as investors attempted to calibrate global treasury appetite in light of the increase in supply.
  • A Bloomberg estimate of annualized interest payments on the US government debt climbed over the $1t mark in October.
  • The NY Fed Consumer Credit report showed a sharp rise in delinquencies with credit card loans now above 8%, well up from the 4% low in Q4 2021.
  • Fewer job openings, slower employment growth, and incrementally higher unemployment have economists growing more cautious and policy makers breathing and as restrictive policy may finally be taking effect.

Economic Release Highlights

  • U of M Consumer Sentiment registered 60.4, well under consensus forecast of 63.7 and a notable decrease versus the prior month reading of 67.9. Longer-term inflation expectations increased to 3.2%.
  • Following a softer than expected October jobs report (150k vs 180k), we’ve seen a slight uptick in weekly unemployment claims to the current 4-week average of 212,250.
This communication is provided for informational purposes only and is not an offer, recommendation or solicitation to buy or sell any security or other investment. This communication does not constitute, nor should it be regarded as, investment research or a research report, a securities or investment recommendation, nor does it provide information reasonably sufficient upon which to base an investment decision. Additional analysis of your or your client’s specific parameters would be required to make an investment decision. This communication is not based on the investment objectives, strategies, goals, financial circumstances, needs or risk tolerance of any client or portfolio and is not presented as suitable to any other particular client or portfolio.
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