Weekly Market Report: December 29th, 2023
As is typically the case, the final week of the year came with a very light economic calendar and financial market volume. The lack of material catalysts last week translated to very little movement, but we did put a bow on December, the fourth quarter, and 2023. The S&P 500 notched a ninth consecutive weekly gain to finish the year up 26%. Emerging and developed international equity markets were also up slightly on the week, finishing up 9% and 19% respectively for the year. Bond yields were generally flat in the last week of the year, but the year saw the yield curve maintain and become further inverted, leaving intermediate term yields lower, the long end flat, and the short end notably higher thanks to Fed policy. Commodity markets were down 1.5% in the last week of the year thanks to declining energy prices which closed the year down double digits.
- A quick recap of market events and financial markets in 2023 shows strong (albeit narrow) global equity returns, very pedestrian bond market returns, a double-digit negative year for commodities, and a slight down year for the USD.
- In typical year-end fashion, crystal balls looking at 2024 abound with S&P forecasts ranging from -12% to +12%, mostly clustered in the 0%-6% range. Meanwhile economists have flipped from overwhelmingly predicting recession in 2023 to a soft/no landing outlook for 2024.
- The 3m/10yr yield curve slope finished the year significantly more inverted than where it began, a condition it’s been in for well over a year. Meanwhile, the 2yr/10yr slope finished the year slightly less inverted than it began.
- A WSJ article highlighted declining quality of survey-based data from households and establishments thanks to a greater societal migration away from the telephone and a survey ‘fatigued’ public.
- Politics and geopolitics are front and center as we enter 2024 with Middle East conflict, government funding cliffs, Taiwan election, and several critical Supreme Court decisions. A research note from SSGA suggests that if you’re feeling like international armed conflicts are on the rise, it’s because they are.
Economic Release Highlights
- The Case Shiller Home Price Index for October rose 0.6% in October, up 4.9% YOY.
- Pending Home Sales in November were flat, less than the 0.8% consensus expectation.