Market Synopsis: Equities mixed, Treasury Yields up, Commodities down, Dollar up, Crypto down
Past Week Events:
CPI was released this week on Wednesday before the market opened. CPI, or the consumer price index, is an indicator of inflation as it measures the change in prices paid for goods and services by consumers. Headline inflation was expected to be about 5% year over year while core inflation which excludes volatile sectors like food and energy was expected to rise 5.2% year over year. Headline inflation came in slightly cooler than expected driven by falling energy prices, specifically gasoline. Core Inflation came in at expectations driven by shelter inflation.
PPI was also released this week on Thursday. PPI is very similar to CPI, but the Producer Price Index evaluates the change in prices faced by manufacturers. PPI was expected to rise 0.3 percent month over month translating to a 2.5% year over year increase. However, PPI came in significantly cooler at 2.3% year over year surprising markets. This was the lowest PPI since January 2021.
The U.S. Leading Indicators Index will be released next week. This composite of 10 crucial economic indicators provides valuable insight into the future of the economy. The index’s purpose is to forecast future economic activity and analize current economic trends. The previous report released demonstrated a -1.2% decline in these indicators, and the next report is forecasted to decrease by another -0.6%.
Industrial Production will also be released next week. The Industrial Production Index, which is released by the Federal Reserve, reports the change in the U.S industrial production output. The last report indicated a 0.4% increase, and this upcoming report is forecasted to demonstrate a 0.1% increase.
Market Snapshot:
Markets went nowhere very fast this week. A series of concerns and catalysts ranging from the debt ceiling crisis to inflation data sent markets on a roller coaster ride. However, markets were largely unchanged on the week as investors still ponder the current environment. The debt ceiling crisis has prompted a flight to gold and a substantial increase in US sovereign risk. Furthermore, the banking crisis only made matters worst as bank deposits continue to shrink and people pull their money. Regional banks are near unprecedented lows. However, a slowing of PPI data sowed more confusion. This confusing data is baffling investors and markets.
Quip of the Week: "Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it." - Albert Einstein
U.S Equities:
Indexes(Week)
SPX 4,124.08(0.29%), DJIA 33,300.62(-1.11%),
NASDAQ 12,284.74(0.40%), RUT 1,740.85(-1.08%)
Sectors
The clear winner of the week was the Communication sector that rose over 2% on the week. On the other hand, however, Energy underperformed all other sectors falling over 2 percent. This weakness in the Energy sector can be attributed to falling energy prices.
Treasuries:
Treasury Yields were all higher on the week with the short end rising the most. The significant drops in yields in the chart above are when CPI and PPI were released. Investors became hopeful of slowing rates but that turned around on Friday.
Commodities:
Oil
Oil fell this week to about 70$ a barrel. This marks the 4th consecutive week of losses for Oil. Weakness in oil markets comes as the debt ceiling crisis rages. Concerns of economic weakness in the United States immediately translates over to oil markets.
Gold
Interestingly enough, despite the debt ceiling debacle gold has moved lower. This is in large part due to the weak inflation data as well as a rising US dollar. Gold tumbled this week to just over $2,000 an ounce.
BTC -26,840, -9.11% ETH - 1,805.85, -9.29%
Bitcoin and Ethereum were battered on the week with each falling about 9 percent. The reason for this sharp decline lies withing a collapse of momentum in meme coins like PEPE which saw massive run ups. These meme coins have declined substantially taking much momentum away from Bitcoin as well.
Europe:
Stoxx 600- 465.49, 0.04% DAX -15,913, -0.30% FTSE 100 -7,754, -0.31%
Chart of the DAX (5-day)
Food in the UK has seen 46 year highs, as an investigation has launched to look into supply chain corruption. This has directly affected consumers, and the problem is further intensifying the already sticky inflation.
Asia:
XJO (Australia)-7,256, 0.51% Shanghai 180 Index-8,458, -2.32% Nikkei 225- 29,338, 0.79%
XJO 5-day Chart
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