Market Synopsis: Stocks Lower, Treasury Yields Up, Commodities Mixed, Dollar Higher, Crypto Lower
Past Week Events:
This Week's Events:
U.S. Services Sector Expands in August 2023
The Services Purchasing Managers' Index (PMI) for August 2023 stood at 54.5, in line with the Services ISM Report on Business. This suggests an expansion of the U.S. Services sector, which encompasses industries like retail, banking, and healthcare. The PMI report, which is a key indicator of overall economic health, suggests that companies inside the services sector are experiencing expansion, with factors like stronger consumer demand leading to the increase.
U.S. Consumer Credit Sees Uptick
Consumer credit scores inside the U.S. witnessed an upward push, growing by means of 10% in July, as suggested by way of the Federal Reserve. This surge shows that customers are borrowing greater, reflecting confidence in the economy and their own finances. The growth in consumer credit can be attributed to various factors, including increased spending on big-ticket items, higher credit card usage, and a general uptick in consumer optimism.
Next Week:
CPI, Consumer Price Index, will be released next week. CPI is a key indicator of inflation, as it measures the change in prices of a certain basket of goods and services. The Federal Reserve is getting closer and closer to pausing rate hikes and finally pleasing the market, but in no way does that mean they will become complacent with where they want inflation to be. CPI has been on the decline, as the year over year percent change was reported at 3.2% last month. The normal CPI is projected to go from 0.2% last month to 0.6% this month, going up. This is only a forecast but does not provide positive hope for the market. The year over is projected to go from 3.2% last month to 3.6%. Core CPI is forecasted to fairly neutral from last month, with it going from 0.2% to 0.2% but the year-over-year forecasted to go from 4.7% last month to 4.3% this month.
The PPI, which is closely related to the CPI, will also be released the following week. Consumer pricing changes are tracked by the CPI, whereas producer price changes are tracked by the PPI. PPI is forecasted to follow a similar pattern as CPI. Both of these economic indicators are quite important and will be eagerly awaited.
Market Snapshot:
This week in the financial world was full of changes. On one hand, we had better economic data, which usually makes people optimistic. But this time, it seemed to worry those invested in bonds and gold. Bonds, which people usually buy when they're unsure about the market, didn't do so well. This is because when the economy looks good, there's a chance that interest rates might go up, which can make bonds less attractive. Gold, which is another safe option for investors, also lost some of its shine. Outside of this data, decisions made in Beijing had a big impact on the global stock market. The banking sector, which is central to the financial world, and big tech companies both had a tough week, pulling stock prices with them. This shows how decisions in one part of the world can affect markets everywhere. Another thing to note is the effect of short squeezes. This happens when traders rush to buy stocks they had bet against, causing those stock prices to shoot up. In the tech world, big companies faced some challenges, showing how unpredictable this sector can be. The bond market also saw some changes. The interest rates on these bonds, known as yields, moved around a lot, trying to balance the positive data with the bigger economic picture. The value of the dollar moved based on both local and global events. Cryptocurrencies like Bitcoin had a rough week. And in the world of commodities, while energy products did well, others like silver stayed steady.
Quip of the Week:"Be fearful when others are greedy and greedy when others are fearful." - Warren Buffet
U.S Equities:
Indexes(Week)
SPX 4,457.49(-1.29%), DJIA 34,576.59(-0.75%),
NASDAQ 13,761.53(-1.93%), RUT 1,851.54(-3.61%)
Sectors:
The market was fairly negative with week,with all sectors ending negative besides Utilities and Energy. Energy was an evident outlier this week, as oil prices are soaring to highs as OPEC is extending production cuts. This is extremely concerning for gas prices have become increasingly unaffordable for many people.
Treasuries:
Treasury Yields Rise Amid Rate Hike Expectations
U.S. Treasury yields have seen an upward trajectory as investors expect further interest rate hikes by the Federal Reserve. The movement in yields, which move inversely to bond prices, reflects the market's reaction to the Fed’s economic policy stance and the wider monetary outlook. The anticipation of tighter financial policy, geared toward curtailing inflation and stabilizing the economic system, has brought about increased yields across numerous maturities. Investors are closely tracking the Fed's communications and economic indicators to gauge the future trajectory of rates and the impact on bond markets.
Commodities:
Oil
Oil Prices Dip Due to Demand Worries but Eye Weekly Rise
Oil prices have slightly retreated, driven by concerns about a potential slowdown in demand. However, despite this dip, the market is still on course for a weekly gain. The demand concerns arise from the U.S. Federal Reserve's decision to reduce its bond purchases, which could lead to a slowdown in economic growth and, consequently, oil consumption. Additionally, China's crackdown on its tech and property sectors has raised fears about a potential hit to oil demand. Yet, the broader market remains optimistic due to tight supplies and strong global demand, positioning oil prices for an overall increase this week.
Gold
The dollar saw a strong week, sending gold down for majority of the week. Majority of those in the gold market are hawking next weeks inflation data (CPI and PPI). Interest rates and gold have a indirect relationship, and so CPI and PPI data indicating cooler inflation means that gold will have an amazing week, and vice versa.
Crypto:
BTC -25,834, 0.07% ETH - 1,631, 0.10%
BTC Graph (5-day)
Europe:
Stoxx 600- 454.66, -0.76% DAX- 15,740, -0.63% FTSE 100 -7,478, 0.18%
DAX Chart (5-day)
The public in England has rose their inflationary expectation in the medium to long run. After a long series of interest rate hikes, inflation in England is still not where people want it to be. A few more interest rate hikes are expected, but many more may seem overkill considering how high interests rates are right now.
Asia:
XJO (Australia)-7,156, -1.67% Shanghai 180 Index-8,049, -0.65% Nikkei 225- 32,606, -0.32%
XJO Chart (5-day)
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