Market Synopsis: Equities up, Treasury Yields mixed, Commodities up, Dollar down, Crypto up
Past Week Events:
- The Federal Reserve’s Federal Open Market Committee (FOMC) released their decision regarding interest rates on Wednesday. The Federal Reserve decided to hike interest rates by 25bps. The Federal Reserve also maintained its terminal rate, however, they offered slightly more dovish guidance for future hikes. This decision was much anticipated and was already priced in heavily into markets before hand.
- Jerome Powell, the chairman of the Federal Reserve, held a press conference right after the release of the interest rate decision. Powell’s comments offered markets some reassurance. Powell’s comments were tilted in a dovish direction as he attempted to reassure and instill confidence in the stability of the United States Banking system. He also addressed the number of complex tools the Federal Reserve is implementing to provide stability to the financial system like the Discount window and liquidity swaps.
- On Friday investors got S&P Global flash U.S. manufacturing PMI. This index acts as a measure of the health of the economy as well as inflation. The results were good yet bad. The report showed a strong economy driven by strong demand. However, concerningly an uptick in inflation was shown by an increase in wages. Still lingering inflation puts the Fed in between a rock and a hard place.
-U.S Consumer Confidence will come out on Tuesday. It indicates how confident consumers are in relevance to the current state of the economy. It is forecasted to go down, most likely due to the recent bank crisis. Inflation is another factor, and consumer confidence also relies on wether consumers believe inflation is getting better or not.
- PCE or the Personal Consumption Expenditures Price Index is released on Friday of next week. Last month, the index shocked investors as it illustrated a spike in inflation. Inflation has been cooling but there have been instances where it seems to still hold a presence. Investors will be on the lookout for which direction PCE takes next week.
Market Snapshot:
- This week was another turbulent one filled with tumultuous headlines ranging from hotter-than-expected inflation to an emergency meeting of the Financial Stability Oversight Council. The Federal Reserve came out with their decision regarding interest rates deciding to hike 25bps. This coupled with Powell's remarks left markets largely unchanged. However, Jannet Yellen, secretary of the Treasury offered some remarks post the market close. Her remarks panicked the markets as she stirred fear of the stability of the banking system. On Friday an emergency meeting of the Financial Stability Oversight Council was called by Jannet Yellen. Furthermore, we received services and manufacturing data. The data showed lingering inflation which highlighted the difficult situation the Federal Reserve is in. The market is already pricing in a potential pause by the Federal Reserve.
Quip of the Week: "Don't invest in something you don't understand - it's like trying to drive a car without knowing how to operate the pedals!" - Meet Kevin
U.S Equities:
Indexes(Week)
SPX 3,970.99(1.39%), DJIA 32,237.53(1.18%),
NASDAQ 11,823.96(1.66%), RUT 1,734.92(0.52%)
Sectors
- Utilities and Real Estate were the laggards of the week each following over 2.5%. Real Estate’s fall can be attributed to its close ties to smaller banks from which most of office REIT’s loans come. On the other hand, Tech, Energy, and Materials were the top performers. It seems the Tech has become the new safe haven for many investors.
Treasuries:
- Treasuries had a very volatile week especially with the many headlines. The events of Wednesday, the FOMC interest rate decision, Powell’s and Yellen’s comments send yields tumbling. Overall, every treasury yield’s fell lower except for the 30 year.
Commodities:
Oil
- Oil was up about 5 percent of the week closing at about 70$ a barrel. Oil has fallen greatly over the past few weeks because of a surprise supply build up.
Gold
- As can be expected gold has been hovering around 2,000$ an ounce as we have seen a flight to safety. Investors weary of the instability of the banking system have fled to safe-haven assets like Gold.
BTC -27,577, 2.93% ETH - 1,758.42, 0.83%
- Crypto had a fair week with Bitcoin rallying about 3 percent. Bitcoin’s rally over the past couple weeks can be attributed to the instability faced in the banking system. On another note, Coinbase is facing issues with SEC whom are threatening securities charges.
Europe:
Stoxx 600- 440.11, 0.87% DAX -14,957, 1,28% FTSE 100 -7,405, 0.96%
Chart of the DAX (5-day)
- This past week has been a struggle for European banks, as the Deutsche Bank and UBS plummeted. Despite this recent bank crisis, the ECB expresses close to no worries. EU leaders like Dutch Prime Minister Mark Rutte say there should be no panic because the banking industry is fundamentally stable and has grown a lot since the 2008 financial crisis. The question remains as to whether these statements are putting forth a false hope or wether these banks will indeed hold up.
Asia:
XJO (Australia)-6,995, -0.57% Shanghai 180 Index-8,483, 0.67% Nikkei 225- 27,385, 0.19%
XJO 5-day Chart
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