Market Synopsis: Equities mixed, Treasury Yields mixed, Commodities mixed, Dollar up, Crypto up
Past Week Events:
This week on Tuesday the FOMC held a meeting in order to discuss critical monetary policy decisions. Ultimately, as shown by the minutes of the meeting released on Wednesday they decided to hike rates another 25 basis points. This hike in rates was expected and not much of a shock to markets. Jerome Powell held a press conference immediately after the decision was released where he largely implied a pause in rate hikes was on the horizon. It is not a guarantee but many investors believe this rate hike cycle may be over.
On Friday investors received critical jobs data regarding the unemployment rate and hourly wages. The data came in hotter than expected with another 253,000 jobs added leading to unemployment falling to 3.4%. Furthermore, hourly wages crept up as well. Payrolls beat expectations for the 13th consecutive month in a row. These numbers paint a picture of a continued tight labor market where the effects of tight monetary policy by the Federal Reserve isn't being fully realized yet.
CPI will be released next week. CPI, or consumer price index, is an excellent indicator of inflation as it measures the change in prices paid for goods and services for consumers. CPI has been on a decline as volatile industries like energy and food have gone down, however, core CPI which excludes food and energy, has been on the rise indicating inflations fundamental existence. CPI is projected to stagnate, while core CPI is project to slightly increase.
PPI will also be released next week. PPI is very similar to CPI, but the Producer Price Index evaluates the change in prices set by producers. PPI is following a similar trend to CPI, where PPI is projected to go down but core PPI is projected to actually increase.
Market Snapshot:
Markets went like gangbusters this week. A concoction of catalysts, such as Powell's press conference, jobs data, and renewed fears of a banking crisis, established conditions for a volatile week. The FOMC's decision to hike rates by 25 basis points was expected and not of great concern, but Jerome Powell's comments that followed were as critical as an acid-base titration. Powell heavily insinuated that a pause in rate hikes may be coming. Investors have been awaiting Powell's comments in order to see how the Federal Reserve would attempt to maintain a delicate equilibrium between financial stability and price stability. Furthermore, job data added another variable to the mix. Jobs data came in hotter than an exothermic reaction, with unemployment continuing to fall and wages rising. These major points were also coupled with renewed fears of a banking crisis fueled by rumors of instability among banks like PacWest and Western Alliance. This comes even after the situation had supposedly stabilized with the acquisition of First Republic Bank by JP Morgan. It was a tumultuous week for investors, to say the least.
Quip of the Week: "In the stock market, the most important organ is the stomach, not the brain." - Peter Lynch
U.S Equities:
Indexes(Week)
SPX 4,136.25(-0.80%), DJIA 33,674.38(-1.24%),
NASDAQ 12,235.41(0.07%), RUT 1,759.88(-0.51%)
Sectors
Only three sectors were able to make it in the green, Tech, Utilities, and Health Care. Tech was the leader of the three most likely still propped up by the solid earnings from last week. On the other end of the spectrum, Energy was the biggest loser of the week down almost 6%. Financials surprisingly was only down 2.5% considering the meltdown of banking stocks like WAL and PACW.
Treasuries:
Treasury Yields were mixed on the week seeing some volatility with the release of the FOMC decision. Longer-term yields rose on the week not falling that much with the signaling of a potential pause. On the other hand shorter-term yields fell a decent amount.
Commodities:
Oil
Oil was very volatile this week. Prices “flash crashed” about 7 percent this week before the market open for no apparent reason. There was a swift recovery, however, and prices ended at about 71$ a barrel.
Gold
Gold has been on a tear since the beginning of the year. Gold continued its outperformance on the week breaching 2,000 an ounce and sitting near record highs.
BTC -29,521, 0.58% ETH - 1,987.93, 4.86%
Bitcoin was largely unchanged on the week. Ethereum, however, rallied on the week, especially with the release of the jobs data. Ethereum rose just under 5 percent almost to close the week out at 2,000.
Europe:
Stoxx 600- 465.31, -0.28% DAX -15,961, 0.24% FTSE 100 -7,778, -1.17%
Chart of the DAX (5-day)
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