Weekly Summary

Last week was another slow week across markets, though when it comes to investing no news is often good news. Unemployment released at lower-than-expected levels while new job payrolls were higher than expected. This was considered positive news by equity markets and long-term fixed income, while short term rates rose out of an expectation that the Federal Reserve may keep rates higher for longer than previously expected. Oil and Natural gas continued their downward trend after weather forecasts were revised to predict an even milder winter, and demand in China was projected to be lower than expected. Key inflation measures release this Tuesday and Wednesday, and the Federal Reserve will announce their interest rate decision at their final meeting of the year on Wednesday afternoon.

Economic Data

There were only a few major pieces of economic data released last week as markets wait in anticipation over US inflation data releasing this Tuesday and Wednesday. The Bank of Canada decided to hold rates steady at 5.0% as expected, while the Euro Area reported annualized GDP growth of -0.1% in the third quarter of 2023, compared to growth of 5.2% in the US. US employment data released Friday with both new payrolls and unemployment more optimistic than expected. One aspect currently helping employment data is the end of strikes and union disputes in the Auto and Entertainment industries. This Tuesday US CPI, a consumer measure of inflation, will release while PPI, a measure of inflation relating to companies’ expenses, will release the following day.

Equities

Last week equities continued the slow and steady progress that began in late October. The S&P 500 has gained slightly over 12.2% since this rally began and the tech heavy Nasdaq 100 gained over 14.5% during the same period. December is historically a strong month for equity markets and the trend has continued so far this year. The S&P 500 index is now only about 4.5% under the all-time high reached in January of 2022. If markets continue to follow the trend of the past several weeks we can expect to see the index reach a new all-time high as soon as early to mid-January. Equity markets performed surprisingly well after positive employment data released on Friday. Abnormally, this market cycle equities have often reacted negatively to positive employment data as it pushes the expectation of rate cuts further into the future. With this rate cycle predicted to soon end, markets appear to finally be returning back to more normal behavior.

Fixed Income

After several weeks of falling rates across the yield curve we finally saw an increase in rates under ten years after employment data released Friday. However, twenty- and thirty-year treasury rates continued to fall. This could be seen as predicting a “higher for longer” strategy by the federal reserve, where rates would be eventually expected to fall, but may stay steady at current levels throughout 2024 if there are no further signs of an approaching recession. Futures markets are currently predicting about a 39.9% chance of rates decreasing by the end of March, and a 71.4% chance that rates will fall by early May.

Commodities

Fear surround OPEC+’s ability to control oil prices, along with lower-than-expected projected demand from China, caused oil prices to fall again last week. Natural gas prices were mostly flat like the week before, but prices fell nearly 10% this morning in reaction to warmer than expected weather forecasts released over the weekend. US natural gas stockpiles are currently 7.3% higher than this time last year and 6.7% higher than the five-year average for December. The dollar reversed from its previous trend and had a mild rally resulting in a decline in gold prices. Gold then fell an additional 1.5% on Friday after employment data released. 

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Weekly Summary

Several key pieces of economic data were released last week that implied inflation in the US and Euro Zone is continuing to moderate as hoped by the Federal Reserve. Both equity and fixed income markets were slow heading into this week but reacted positively to the release of these inflation metrics on Thursday and Friday. Natural gas prices fell early in the week but returned to previous levels, while oil prices decreased slightly after an OPEC+ meeting signaled that the cartel may have difficulty coming to agreements in the future.

Economic Data

The most significant piece of economic data released last week was the Personal Consumption Expenditures Price Index. The core version of this index, which excludes volatile food and energy prices, is the Federal Reserves preferred measure of inflation and is therefore followed extremely closely by investors. Both core and headline PCE released at the expected rates of 3.5% and 3.0%, respectively. Core inflation in the Euro Area released the same day at 3.6%, under the forecasted 3.9%. Another metric of US inflation, the Consumer Price Index, is set to release December 12^th, one day before the Federal Reserve makes its final rate decision of the year.

Equities

As stated earlier, the first half of the week was very slow for equity markets but a positive reaction to inflation readings led to strong performance on Thursday and Friday. This capped off what has been an excellent month of performance across equity markets, with the Dow Jones Industrial Average now posting gains for five weeks in a row. Previously underperforming segments of the market like small and mid cap stocks overperformed ending the week up about 3.5% and 2.9%, compared to 0.9% for the large cap S&P 500. The S&P 500 then reversed some gains this Monday but has still appreciated about 4.8% in value over the past month.

Fixed Income

Fixed income rates fell across the yield curve last week following the inflation data releases, driving bond prices up. These inflation metrics releasing at or below expected levels near unanimously solidified the consensus that interest rates have already peaked at current levels. Futures markets are now making a 99.7% prediction that there will be no rate increases at the December Federal Reserve meeting, and a 0.3% chance that rates may even be decreased. By the March meeting the probability of a rate decrease from current levels is 58.1%.

Commodities

Last week the main driver of oil prices was an OPEC+ meeting that was previously delayed. The cartel announced further production cuts but that these cuts would be “voluntary,” signaling that OPEC+ countries may have difficulty coming to agreements in the future. Perhaps most notable was Angola’s statement that it will not comply with these production quotas. This resulted in oil prices falling slightly unlike the usual price increases that follow OPEC+ production cuts. Natural gas prices fell early in the week but then increased back to previous levels. The US has continued to increase exports of natural gas, but reserves in Europe are starting to fall as the continent finally begins to experience winter weather. Gold and silver performed well again last week as the dollar has continued to depreciate in comparison to other currencies.

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Weekly Summary

Last week was fairly uneventful with markets closed on Thanksgiving and only open for a half day on Black Friday. This Thursday the Personal Consumption Expenditures Price Index measure of inflation will release. PCE is the preferred inflation measure of the Federal Reserve and the release will have a major impact on whether the Fed decides to increase interest rates again this cycle. Inflation data for the Euro area will release the same day and is also likely to have an impact on markets, although to a lesser extent than PCE.

Economic Data

Last week Canada reported inflation of 3.1% versus the expected 3.2%. This was considered a positive sign for upcoming US inflation metrics because the two economies are so closely intertwined. The following day US consumer sentiment released at 61.3 versus the expected 60.5, with any reading above 50 indicating consumer sentiment is becoming more positive. Consumer sentiment tends to be considered even more important as we approach the end of the year as holiday spending is often viewed as an indicator of the current state of the economy.

Equities

Equity markets performed well on Monday with the S&P-500 gaining about 0.99%. Some of these gains were reversed the following day but the index ultimately ended the week up 0.84%. The tech heavy Nasdaq-100 also performed well ending the week up 0.86%, then gaining an additional 0.25% as of this Monday afternoon. Equity markets are expected to be more volatile than normal following the PCE release before markets open on Thursday. Previously underperforming portions of the equity markets performed well after the Consumer Price Index measure of inflation released at lower-than-expected levels earlier this month. If PCE follows the same pattern we may see a similar performance from investments such as small cap and emerging market stocks.

Fixed Income

Last week fixed income markets were even less volatile than equity markets. Short term interest rates increased slightly, with the two-year treasury yield increasing from 4.88% to 4.94%. Long term rates were essentially unchanged after dropping earlier this month following the CPI release. As the next Federal Reserve meeting draws closer the probability of a rate hike in January or March has slightly increased. This is fairly normal as many investors use the future contracts used to determine these probabilities as a hedge in an attempt to limit potential losses in the case that interest rates increase. Despite this there is still only a 6.9% prediction that rates will increase at the January meeting early next year, and an even lower probability that rates will increase at any of the following meetings next year.

Commodities

Oil prices continued to slowly fall last week and fell even further Monday morning after it was announced that an OPEC+ meeting was delayed until later in the week. OPEC+ countries produce about 40% of the world’s crude oil and are able to have a large effect on oil prices by increasing or lowering production. OPEC+ has limited production since last November driving oil prices higher but is currently expected to increase production sometime next year. Gold and silver performed well last week as the dollar has continued to weaken in comparison to other currencies.

Interesting Articles

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• Bloomberg: Oil Swings as OPEC+ No Closer to Resolving Its Quota Dispute

Weekly Summary

Both equity and fixed income markets rallied last week after the release of unexpectedly low inflation data. As inflation continues to fall the possibility of a so called “soft landing” appears to be more and more realistic, meaning the Federal Reserve will be able to slow the economy without a large increase in unemployment. Markets are in near unanimous agreement that interest rates have peaked this cycle and will fall within the next year at the latest. This week can be expected to be slower than normal with markets closed completely for Thanksgiving and closing early on Black Friday.

Economic Data

Last week all eyes were on the release of two key inflation measures. On Tuesday the Consumer Price Index released at 3.2%, just under the forecast of 3.3%. Core CPI, which excludes volatile food and energy prices, also released below expectations at 4.0% versus the forecasted 4.1%. The next day the Producer Price index released even further below expectations at only 1.3% versus the forecasted 1.9%. With unemployment still low these inflation readings were an excellent sign for the economy and strengthened expectations that interest rates have peaked at current levels. The Personal Consumption Expenditures Price Index, a measure of inflation preferred by the Federal Reserve, will release November 30^th giving the Fed two weeks to analyze the data before their next meeting on December 13^th.

Equities

Lower than expected inflation readings caused an extreme rally in the equity market with the S&P 500 up almost 2% on Tuesday alone. The positive PPI release the following day resulted in another small boost to the markets which held through the rest of the week and weekend. Previously underperforming sections of the market also performed well with small cap stocks gaining over 5.0%. Overall November has been an excellent month for equity markets across the board and the S&P 500 is quickly approaching the highs reached in July of this year.

Fixed Income

Fixed income markets also performed well with interest rates falling across the yield curve. We recently made the decision to extend the duration of one of our portfolios, meaning the average length of bonds held was increased. Locking in these high rates for longer periods of time will result in higher performance in the event that rates continue to fall as they did last week. Low inflation readings also decreased expectations that the Fed will continue to increase interest rates. Futures markets now predicting only a 2.1% chance of a rate increase this cycle and expect interest rate cuts from the Fed as early as the middle of next year.

Commodities

Oil prices fell late last week but quickly recovered to the previous week’s prices over the weekend. Natural gas prices followed a similar pattern but continued to fall on Monday resulting in the lowest prices in over a month. Low inflation data resulted in a weaker dollar which caused the price of both gold and silver to rally. Notably gold broke over the $2,000 per ounce range which has recently been seen as a point of psychological resistance.

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Weekly Summary

Last week was fairly slow when it came to economic releases and market performance. However, this week is expected to be more volatile due to two key inflation measures releasing Tuesday and Wednesday. The most notable surprise last week was weaker than expected consumer sentiment in the US, a potential indicator that the US economy is cooling after unexpectedly high growth last quarter. Overall markets were more calm than normal last week with equity indexes performing well and energy prices falling in a positive sign for short term inflation.

Economic Data

On Tuesday inflation data for China released at -0.2%, slightly lower than the forecast of -0.1%. China is one of the few major economies that is currently facing deflation rather than inflation due to an abnormally weak demand for manufactured goods and a struggling real estate sector. Few other major pieces of economic data released last week, though US consumer sentiment was weaker than expected. This is a further piece of evidence that consumer spending is decreasing and should help slow price increases due to weaker demand. This Tuesday the US consumer price index, a major measure of inflation, will release and is likely to have a strong impact on the Federal Reserve’s final meeting of the year in mid-December. The following day the producer price index will release, a measure of inflation relating to companies rather than consumers. The producer price index is often seen as a leading indicator for consumer inflation as companies tend to pass on short term price changes to customers.

Equities

The upward trend in equity markets continued last week following strong performance the week before with the S&P 500 ending the week up 1.1%. The tech heavy Nasdaq-100 also performed well after several strong earnings reports finished off the third quarter. Weak consumer sentiment did not seem to affect equity markets on Friday though the S&P did reverse some of its gains over the weekend. Despite this the index is up over 6.9% from the lows reached in late October and if the rally in equity markets continues the S&P will soon approach the all-time highs achieved in January of 2022. On Friday Moody’s, one of the three major credit rating agencies, suggested it may downgrade the US due to concerns over a growing budget deficit and potential government shutdown. This was expected to put downward pressure on US equity prices though as of Monday morning it appears to have had little effect. Equity markets should be expected to be more volatile than average this Tuesday and Wednesday surrounding the release of inflation data.

Fixed Income

Fed Chair Jerome Powell made two public speeches last week and appeared to downplay some of the more optimistic remarks made after the previous week’s Fed meeting. Powell emphasized that the Federal Reserve is “not confident” that current rates will bring inflation back to the 2% target, echoing remarks made by Fed officials after policy decisions earlier this year. This resulted in futures markets predicting a slightly higher chance of further hikes this cycle with the probability of a rate increase by January now over 25%. Climate activists have repeatedly attempted to disrupt Powell’s public statements in the past several weeks although the most recent interruption was considered a minor distraction and Powell was later able to finish his remarks. Long term rates were largely unchanged last week after falling dramatically the week before, though “medium term” rates in the two-to-ten-year range rose slightly.

Commodities

Oil prices fell again last week after weaker than expected demand was predicted in both the US and China. West Texas Intermediate Crude Oil, often abbreviated as WTI, is now trading significantly lower than the long-term estimate of $82.00 at only $77.50 per barrel. Natural gas prices also fell as investors continue to bet that weather will be milder this winter than in previous years. The price of gold and silver fell slightly but could see major gains this week if inflation comes in higher than expected. While gold itself is not an income producing asset its often used by investors to diversify portfolios and is seen as a defensive investment against high inflation.

Interesting Articles

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Weekly Summary

Markets were optimistic heading into Wednesday’s Federal Reserve meeting following the release of mild inflation data and strong GDP growth the previous week. The Federal Reserve made the decision to hold rates steady as expected, and Fed Chair Jerome Powell made statements at the following press conference that were perceived as hinting towards a lower chance of rate hikes in the future. This, along with Friday’s unemployment release, caused long term fixed income rates to drop significantly while equity markets had their strongest week so far this year. Commodity prices were flat with the price of oil, natural gas, gold, and silver all largely unchanged.

Economic Data

As we transition into November several key pieces of macro-economic data for the month of October were released. On Monday Germany surprised economists by reporting an annualized GDP decrease of 0.3% versus the expected decrease of 0.7%. Inflation in Germany also fell from a 4.5% annualized rate in September to a 3.8% in October, lower than the expected 4.0%. Manufacturing demand was slightly lower than expected in China putting mild downward pressure on energy prices while the Bank of Japan decided to leave its short-term interest rate target at -0.1%. The following day the Euro Area released core inflation readings at the expected 4.2% annualized rate but had a weaker than expected GDP growth rate of 0.1% versus 0.2%. On Friday the US announced that unemployment had increased slightly in October from 3.8% to 3.9%. This week inflation data for China and GDP growth for the United Kingdom are both set to release.

Equities

US equity markets had their best week of the year so far with the Dow Jones Industrial Average and S&P 500 both gaining over 5.0% while the Nasdaq Composite gained over 6.5%. The stock market started the week off strong following the previous week’s release of abnormally strong GDP growth despite cooling inflation, then finished even stronger after the US reported slightly higher than expected unemployment on Friday. While increasing unemployment would traditionally be seen as a negative sign for the economy, this report was considered a positive for equity markets in the short term as it implies that the Fed is making progress towards its goal of slowing down the economy and continuing to reduce inflation. Over 80% of companies in the S&P 500 have now presented third quarter earnings reports and earnings within the index are currently on track to increase 5.7% from a year earlier. Major companies reporting earnings this week include Disney, Warner Bros. Discover, MGM Resorts, and Uber.

Fixed Income

Long term rates fell dramatically last week, breaking the trend of consistent increases that began in early September. This was initially driven by the Fed hinting that rising long-term yields may reduce the need for further hikes this cycle, then accelerated after higher-than-expected US unemployment was announced on Friday. Both the Federal Reserve and Bank of England followed the European Central Bank by leaving rates unchanged at 5.5% and 5.25% respectively. Official statements by the Federal Reserve during policy meetings have remained largely unchanged over the past several months, but responses by Fed Chair Jerome Powell shortly after last week’s meeting imply that may soon change. During a press briefing Powell stated that “The question we’re asking is: Should we hike more?” and that “Slowing down is giving us […] a better sense of how much more we need to do, if we need to do more.” These statements were considered less ‘hawkish’ than previous responses by Powell, meaning that the Federal Reserve is expecting a low chance of further rate increases this cycle.

Commodities

Oil prices were less volatile last week compared to earlier this month, trading in the $81.00 to $83.00 a barrel price range as investors become less concerned about the potential impact of the Israel-Hamas conflict. Natural gas prices rose slightly late last week before falling to previous levels this Monday morning after it was announced that Europe’s natural gas storage is at a record high despite falling temperatures across the continent. Gold and Silver prices remained steady for the second week in a row after a mild rally in precious metals that began in early October.

Interesting Articles

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Weekly Summary

Last week the Bank of Canada and European Central Bank decided to keep interest rates steady in a signal that they believe inflation is moderating beyond the US. US GDP growth for the third quarter was much higher than expected while PCE inflation readings released at expected levels. This has led to optimism going into the Federal Reserve meeting this Wednesday where US rates are also expected to remain steady. Long term fixed income rates rose again last week although less dramatically than in the previous two weeks. This continues to put pressure on equity markets that must compete with a higher guaranteed return, and to consumers and companies through a higher cost of personal and corporate debt. Oil prices are still somewhat more volatile than normal, but prices fell last week as fears over the Israel-Hamas conflict’s global impact begins to moderate.

Economic Data

On Monday inflation in Australia released at 5.4% versus the expected 5.3%, but still down from last month’s 6.0% reading. On Wednesday the Bank of Canada announced they would hold interest rates steady at 5.0% for the third meeting in a row. The following day the European Central Bank announced they would also leave their 4.5% rate unchanged at the first ECB meeting without a rate increase in over a year. This coming Wednesday the Federal Reserve will announce its interest rate decision and is also expected to hold rates steady. US GDP grew at a 4.9% annualized rate in the third quarter, far higher than both the predicted 4.3% and the second quarter growth rate of 2.1%. Finally, both the headline and core Personal Consumption Expenditure Index measures of inflation released at the expected 3.4% and 3.7% respectively. These final two pieces of economic data, along with a currently low unemployment rate, imply that the US economy is still strong and defying previous predictions of a recession.

Equities

Equity markets were down again this week with the S&P-500 losing 2.4% and the NASDAQ-100 down 2.9%. As of this Monday many of these losses were reversed with both indexes gaining back over 1.1% over the weekend. Several major tech companies including Microsoft, Alphabet, Meta, Intel, and Amazon reported earnings last week with all besides Intel reporting higher than expected revenue and income. Despite this equity markets struggled to compete with long term fixed income investments with 10-year treasuries yields now hovering near the 5.0% range. However, short term interest rates seemingly coming to a peak, resilient economic growth, decreasing inflation, and strong corporate earnings paint an optimistic picture for equity markets in the coming months.

Fixed Income

Long term rates rose again last week although the change was far less dramatic than the week before. 30-year treasury yields remained over 5.0% while the 10-year traded in the 4.8% to 4.9% range, occasional breaking over the 5.0% milestone. The opportunity to lock in these long-term returns have put pressure on equity markets and borrowers. Higher long-term rates are passed on to consumers through increased rates on mortgages and other forms of debt, and to companies that must issue bonds at rates that can compete with treasuries. Under current market conditions the return on bonds is also asymmetric, meaning the gain after a 1.0% decrease in rates would be higher than the loss after a 1.0% increase in rates. This is especially true for long term fixed income investments as they are inherently more sensitive to interest rate changes. Futures markets are still predicting that short term rates have peaked at the Fed’s 5.25% to 5.50% target with the probability of a rate increase the highest in January at 40%.

Commodities

The Israel-Hamas conflict continues to cause increased volatility in oil prices with the World Bank now warning that prices could reach as high as $150 a barrel if the conflict intensifies in a repeat of the 1970’s supply shock. However, this should only be considered a worst-case scenario as the middle east is currently responsible for a much smaller percentage of global oil exports compared to that period. Current predictions are that overall commodity prices will fall around 4% in the next year with oil remaining around $82 a barrel. Natural gas prices increased slightly last week reversing the drop in prices from the week before as temperatures continue to fall. Gold and Silver prices remained steady following the mild rally in precious metals that began early this month.

Interesting Articles

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Weekly Summary

Last week inflation data for several major countries released at or below expectations, painting an optimistic picture that price levels are continuing to stabilize globally. This Friday US Core PCE, the measure of inflation most closely watched by the Federal Reserve, is set to release while the Fed will make its next interest rate decision the following Wednesday. Long-term rates rose sharply last week, providing investors with an opportunity to lock in higher-than-normal yields and causing equity markets to struggle to compete with fixed income markets. Uncertainty surrounding the conflict between Israel and Hamas caused increased volatility in oil prices and continued to put upward pressure on precious metals like gold and silver.

Economic Data

Last Monday inflation in Canada released at 3.8%, under the forecast of 4.0%. US retail sales grew by 0.7% in the month of September, higher than the expected 0.3% in a sign that the economy remains resilient despite rising rates. Chinese GDP also grew more than expected at 4.9% annually versus the forecasted 4.4%. On Tuesday core inflation in the UK released at 6.1% below the expected 6.6%, while core inflation in the Euro Area was as expected at 4.5%. Finally, on Thursday Federal Reserve Chair Jerome Powell gave a speech at the Economic Club of New York Luncheon and spoke positively about the current direction of inflation, the labor market, and economic growth. However, he remained consistent with the Fed’s previous position that further tightening may still be necessary as long as core PCE remains above 3.0%. August’s core PCE inflation reading was 3.9% and September’s reading is set to release Friday morning.

Equities

Equity markets struggled to compete with rising fixed income rates last week with the S&P-500 falling about 2.4% and the NASDAQ-100 falling about 2.6%. Despite this the S&P-500 has still performed above average this year and is up about 9.7% from the lows reached in March following the regional banking crisis. In other positive news the VIX, a measure of volatility in the S&P-500, fell from a seven-month high on Monday morning. The VIX is often referred to as the market’s “fear index” or “fear gauge” as it tends to increase during times of uncertainty and decrease during bull runs in equity markets. Only about one fifth of S&P-500 companies have reported earnings for last quarter so far and earnings for several major companies including Microsoft, Alphabet, Meta, Intel, and Amazon will release later this week.

Fixed Income

Interest rates were more volatile than normal last week with further large moves in the long end of the yield curve. Yields on 10- and 30-year treasuries increased by roughly 0.3% with the 30-year yielding over 5.1% Monday morning. 30-year treasuries are now yielding more than their 2-year equivalent, another step in the yield curve reversing from its currently inverted state. An inverted yield curve has historically been a predictor of a coming recession, so this reversal is a positive sign for the overall state of the economy. Expectations of a rate increase at the November 1^stFed meeting dropped last week with there now being a 98.5% prediction of no rate increase and a 1.5% prediction of rates falling. Futures markets continue to imply that peak rates have already been reached although there is still a roughly 35% prediction of one more rate increase before the end of this cycle.

Commodities

Oil prices rose slightly last week though the current price of about $87.00 a barrel is still below the highs of over $93.00 reached in late September. Price increases earlier this year were mostly the result of reduced supply from OPEC and ongoing Russian sanctions, but the more recent short-term increases are correlated with increasing uncertainty surrounding the conflict between Israel and Hamas. While this region of the Middle East is not a large supplier of oil, an escalation to a larger conflict involving countries like Iran, Egypt, and Syria has the potential to disrupt key trading routes such as the strait of Hormuz. Natural gas prices fell slightly as worldwide production hit an all-time high and weather throughout October was milder than expected. Both gold and silver continued to follow the upward trend that began following Hamas’ attack in southern Israel.

Interesting Articles

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Weekly Summary

Several key measures of inflation released last week at close to expected levels, leading to strong performance in both the equity and fixed income markets. A shifted tone in messaging by the Federal Reserve has increased expectations that peak interest rates have already been reached and caused long term Treasury rates to drop for the first time in several weeks. The tightening of sanctions on Russian oil exports along with concerns over geopolitical stability in the Middle East caused oil prices to rise slightly in the second half of last week after falling from the high reached in late September. The same geopolitical tensions caused a flight to safety among some investors and led to a strong performance by precious metals last week.

Economic Data

On Wednesday the Producer Price Index measure of US inflation released at 2.2% year over year, above the consensus estimate of 1.6% but only slightly higher than last month’s reading of 2.0%. The following day the Consumer Price Index measure of inflation released at 3.7% year over year, matching last month’s reading and again only slightly higher than the consensus estimate. Core CPI inflation, which excludes more volatile food and energy prices, released at the expected 4.1% year over year and fell slightly from last month’s reading of 4.3%. The largest contributor to consumer inflation was the rising cost of shelter, which accounted for over half of the increase in prices this month. Rising oil prices were also a major contributor in September though we can expect to see a much smaller impact in next month’s readings as oil prices have fallen after reaching a one year high at the end of September. Inflation measures for the UK, Euro Area, Canada, Australia, and Japan will be releasing later this week.

Equities

Equity markets performed fairly well last week with the S&P 500 now up over 0.9% from its open last Monday and the NASDAQ-100 up almost 0.8% over the same period. Several Federal Reserve officials spoke publicly last week and there appears to be a slow shift in tone regarding the central bank’s messaging. Discussion among Fed members seems to be transitioning away from whether further rate hikes will be needed and towards how long restrictive rates will need to be maintained next year. Companies with high exposure to the defense contracting industry performed especially well early last week out of fear that tensions between Israel and Hamas may continue to increase.

Fixed Income

Long term rates fell last week after several weeks of rate increases beginning at the end of August. Mild inflation releases continue to increase expectations that peak short-term interest rates have already been reached, or will be reached no later than January of next year. Markets are currently only predicting a 7.3% chance of a rate increase at the Federal Reserve’s November 1^st meeting, down from 19.6% last week and 27.2% the week before. The next major events to affect fixed income markets will be the European Central Bank’s interest rate decision on Thursday, October 26^th and the Personal Consumption Expenditure measure of US inflation releasing the following day.

Commodities

Oil prices were mostly flat early last week trading in the $83-$85 per barrel range after falling from a one year high of over $94 earlier this month. Prices rose slightly on Friday after the United States tightened G7 sanctions on Russian oil sold through Turkey and the United Arab Emirates. The ongoing conflict between Israel and Hamas has yet to have any significant effect on energy prices as Israel is not a major oil producer, but there is concern that potential involvement by Iran or Saudi Arabia could eventually have an impact on global crude supply. Natural gas continues to slowly rise as the winter approaches and colder weather begins to set in. Gold performed extremely well last week and is currently up over 4.1% from last Monday following the escalation in conflict between Hamas and Israeli troops. Silver followed a similar pattern and is up over 4.4% over the same period.

Interesting Articles

• New York Times: U.S. Clamps Down on Russian Oil Sales With New Sanctions
• CNBC: Consumer prices rose 0.4% in September, more than expected
• Wall Street Journal: What Defense Stocks Say About a More Violent World

Weekly Summary

Last week the Institute for Supply Management released their Report on Business which showed that the US service economy is expanding while the manufacturing economy is retracting slightly. US and Canadian unemployment data showed the amount of new jobs added was much higher than expected in both countries. This week the CPI and PPI measures of inflation are set to release which will likely have a large impact on the November 1^st Fed meeting. Energy prices may be more volatile than normal due to the possibility of countries passing sanctions on Iran for assisting in Hamas’ recent attack on Israel.

Economic Data

The Institute for Supply Management released their September Report on Business, containing the Purchasing Manager’s Index for both manufacturing and services. Manufacturing released at 49, slightly above the forecast of 47.8, while services released at the forecast of 53.6. A PMI reading of above 50 indicates that the sector of the economy is expanding overall, while a reading below 50 shows a contraction. On Friday employment change and unemployment rates for both the US and Canada were released. The US added 336k new jobs in September, over twice as many as expected, while Canada added 63.8k jobs, over three times as many as expected. Canadian unemployment was slightly below the expected 5.6% at 5.5%, while the US was slightly higher than the expected 3.7% at 3.8%. This Wednesday the Producer Price Index measure of inflation is set to release with the Consumer Price Index measure set to release the following day.

Equities

Equity markets started the week slow with the S&P-500 down 1.4% on mid-day Wednesday. The release of a strong ISM Services PMI appeared to reverse the trend and the S&P-500 is now up 0.5% from last Monday’s closing price. The tech heavy NASDAQ-100 performed well over the same period and finished the week up 1.6%, while the manufacturing heavy Dow Jones Industrial Average was up only 0.2%. Overall, more risky stocks such as tech and mid-caps performed well following Friday’s employment release while small-caps and value stocks struggled to keep up.

Fixed Income

The yield curve rose across the board last week though the changes were significant at the long end of the curve. Rates one year or shorter continue to fluctuate in the 5.4-5.7% range while the 30 year is now almost above 5.0%. The probability of a rate increase at the November 1^st Federal Reserve meeting increased from 14.3% to 27.2% following the strong jobs report on Friday, but has now fallen back down to 19.6% as of Monday. This week the fixed income markets will be most concerned with the inflation data releasing Wednesday and Thursday which are likely to have a large impact on whether the Federal Reserve decides to hold rates steady or hike one more time before the end of the year.

Commodities

Oil prices fell slightly last week before opening several dollars up this Monday following the invasion of Israel. Natural Gas also rose in price as colder weather approaches and is now over $3.00. Gold was flat for most of the week before rising over a full percent this Monday alone. Silver also performed well last week gaining 4.0%.

Interesting Articles

• Yahoo Finance: JOBS REPORT STUNNER: US economy creates 336,000 jobs in September, nearly twice the number expected
• Moneywise: America is now paying more in interest on its record $33 trillion debt than on national defense — here's who holds the IOUs
• Morningstar: Should You Delay Taking Social Security Benefits?

Weekly Summary

Inflation in Germany, France, and the general Eurozone all released at below expectations last week, which is good news for the continent’s central bank. Congress was able to pass a last-minute spending bill over the weekend, avoiding a government shutdown but still has only until November 17^th to pass a budget and avoid another potential shutdown. The US PCE measure of inflation and the final Q2 GDP reading both released at expected levels, making the Federal Reserve’s rate decision at the end of the month more complicated. Interest rates continued to rise and oil is now at its highest price in nearly a year, while natural gas is at its highest price since March.

Economic Data

German inflation data released on Saturday at 4.5%, slightly below expectations of 4.6% and was good news for the economic center of the European Union. The rise in German unemployment also came in at only 10,000 citizens versus the expected 15,000. US Q2 GDP released the same day and grew at the forecasted 2.1% in the second quarter. Both the French and Eurozone in general had inflation come in slightly below expectations at 4.8% and 4.9%. The US Personal Consumption Expenditures measure of inflation released on Friday at the expected 3.5%, while core CPE excluding food and energy was at the expected 3.9%.

Equities

The equity markets started the week down with the S&P 500 losing 1.5%. The market rallied on Thursday after the release of US GDP figures but reversed some of these gains on Friday, ending the week down 1.1%. The NASDAQ-100 was mostly flat ending the week down 0.4% but has since recovered and is up slightly under 0.1%. Despite the strong GDP and inflation readings September was the S&P’s worst month this year, even with the Federal Reserve’s decision to not raise interest rates. However, the S&P is still up 11.6% since January and is slowly approaching the all-time high reached at the end of 2021. The potential government shutdown was unlikely to have a large effect on equity markets but could have delayed the release of economic data closely watched by the Federal Reserve such as the unemployment release this Friday. Congress now has until November 17 to pass another bill to avoid a shutdown.

Fixed Income

The long end of the yield curve rose again last week as the ten-year reached a rate of 4.6% while the 30-year passed 4.7%. Predictions of a rate increase at the November meeting rose from 18.4% to 30.9% after the release of US GDP growth on Thursday. The probability of another hike still peaks at the January meeting at 46.2% and cuts are currently not expected until at least July. As rates continue to rise Treasuries are now on track to post their third annual loss in a row for the first time in US history. The unemployment rate releasing this Friday is likely to have a large impact on November’s Fed meeting and the Fed’s action throughout the rest of the fourth quarter.

Commodities

For the second week in a row oil rose to above $93, prices previously not reached since last November. As of Monday, oil has fallen to below $89 a barrel. The price of natural gas also rose sharply from $2.64 to nearly $2.93 with forecasts of cooler months coming up which would increase demand for heating. Gold fell over 3.6% last week after the release of mild PCE inflation and strong manufacturing data released from the Purchasing Manager’s Index. Silver was also hit hard, losing over 5.8% in the last week alone.

Interesting Articles

• BBC: Why government shutdowns seem to only happen in US
• Bloomberg: US Core PCE Prices Post Smallest Monthly Rise Since Late 2020
• Wall Street Journal: Americans Finally Start to Feel the Sting From the Fed’s Rate Hikes

All data and figures in this article were collected from YCharts, Inc. on 10/2/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This report was prepared by Blue Ridge Wealth Planners,  a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training.

All information is strictly as of the date indicated and does not reflect positioning or characteristics averaged over any period.  All information referenced is for strictly information purposes only, and this piece should not be construed as a recommendation to purchase or sell the security referenced. Investing in any security, including the securities presented in this presentation, involves the potential loss of principal, and past performance it not necessarily indicative of future results.

Weekly Summary

The Federal Reserve met this week and announced a decision to keep rates steady as expected. However, their insistence on keeping another rate hike on the table as well as signals of a plan to keep rates high for longer caused equity markets to slide. Inflation throughout Europe finally appears to be beginning to moderate and oil prices seem to finally be stabilizing around $90 a barrel, giving some relief to consumers after a steady rise in prices over the past month. Heading into this week markets will be watching for the release of the US Personal Consumption Expenditures measure of inflation this Friday and to see if Congress is able to pass a new spending bill by Saturday to avoid a government shutdown.

Economic Data

Several inflation measures for foreign countries released last week. On Tuesday, Euro Area core inflation released at the expected 5.3% annually, while Canadian headline inflation was slightly above the expected 3.8% at 4.0%. In more positive news core inflation in the UK was significantly below expectations at 6.2% versus a forecasted 6.8%. Headline UK inflation also released at 6.7%, below the expected 7%. This week we will receive more inflation data from Germany and France, as well as the PCE measure of US inflation. We will also learn the final US GDP growth rate for this year’s second quarter which will shed further insight into the state of the economy.

Equities

The equity markets reacted negatively to the Federal Reserve’s comments with the S&P 500 falling 2.9% on Wednesday and Thursday. The NASDAQ-100 fell an even further 3.2% over the same period with some investors transitioning from growth heavy tech companies into more stable value investments. Equity markets have seen little growth since July after a rally through the first half of this year. Though September has been a weak month for equity markets, indexes like the S&P 500 are still up over 13% since January.

Fixed Income

The long end of the yield curve moved up slightly last week and the curve continues to slowly inch out of its inverted state. The largest topic discussion this week was the Federal Reserve meeting that concluded Wednesday. As expected, Fed officials decided to keep interest rates steady at this meeting but maintained the position that further hikes may still be coming this year. They also pushed back expectations of eventual cuts until June 2024, signaling they are willing to keep rates high for longer than previously expected. The Bank of England also decided to keep rates steady, a move that was less expected as the UK and the rest of Europe continue to struggle with higher inflation than the US.

Commodities

Oil prices reached their highest point so far this year on Monday surpassing $95 a barrel at one point. However, prices dropped slightly throughout the rest of the week and now appear to be stabilizing around $90 a barrel. Natural gas prices continue to hover in the $2.50 to $2.70 range but can be expected to slowly increase as temperatures begin to moderate and demand rises. Gold rose following the Fed’s re-stated commitment to keep rates higher for longer, but by Friday afternoon was trading back at the previous week’s levels. The price of silver fell slightly throughout the week but is still up over 1% for the month.

Interesting Articles

• PBS: The government is headed for a shutdown. Who’s affected and what happens next?
• Wall Street Journal: Higher Interest Rates Not Just for Longer, but Maybe Forever
• Financial Times: Western companies take slow steps towards China ‘de-risking’

All data and figures in this article were collected from YCharts, Inc. on 09/25/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

There was little movement in either the equity or fixed income markets last week despite key inflation metrics releasing slightly higher than expected. However, much of the rise appears to be due to the rising price of oil as demand increases in China. The Federal Reserve is set to meet this week and will decide whether to increase interest rates. Markets currently do not expect rates to increase at this meeting, so discussion will likely center mostly on the economic outlook for the rest of the year.

Economic Data

Both the Consumer Price Index and Producer Price Index measures of inflation released this week. CPI was only slightly higher than expected at 3.07% annually versus 3.6%. However, core CPI, which excludes food and energy costs, released as expected at 4.3%. PPI was also slightly higher the expected at 1.6%. Core PPI released at the expected 2.1%, the lowest annual level since January 2021. Most of the increase in both measures of inflation was due to rising energy prices as oil continues to climb higher.

Equities

Markets reacted surprisingly well to slightly above inflation readings with the S&P 500 rising 0.39% on Thursday. However, all gains in the index were reversed on Friday with the index reverting to the previous week’s levels. The S&P 500 is still up over 2% in the last month and over 16.5% since the start of the year. Chipmaker Arm Holdings had an initial public offering and surpassed price expectations over excitement about the company’s participation in the booming AI industry. Private equity company Blackstone as well as Airbnb joined the S&P 500 on Monday.

Fixed Income

US Treasury rates were again largely unchanged last week although long term rates did rise very slightly. The Federal Reserve is set to meet this week and futures markets are predicting only a 1% probability of a rate increase, down from 3% last week. Market consensus appears to be that peak interest rates have already been reached, though there’s still about a 40% probability of one more increase by December. The European Central Bank raised interest rate targets by 0.25% to 4.5% in an effort to fight ongoing inflation in the Eurozone.

Commodities

Increased Chinese demand along with export restrictions by OPEC have continued to put upward pressure on the price of oil. WTI crude oil futures prices have risen to over $90 dollars a barrel for the first time since November 2022. Natural gas prices have hovered around $2.50 for the past several months and are not expected to increase until the winter season. The price of gold and silver rose slightly after a gradual decline that began at the end of August.

Interesting Articles

• Yahoo Finance: 'An economic divide that is widening': Almost a third of Americans earning $150,000 a year or more say they're living paycheck to paycheck and many rely on credit cards to close the gap
• Wall Street Journal: Why a Soft Landing Could Prove Elusive
• CNBC: Major central banks are on the brink of peak rates — but the inflation battle might not be over

All data and figures in this article were collected from YCharts, Inc. on 09/18/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

US markets fell slightly after being closed Monday for Labor Day but have now mostly recovered due to several strong performers in the tech industry. Discussion this week is likely to center mostly around the CPI and PPI measures of inflation releasing Wednesday and Thursday respectively. Fixed income markets were little changed though may become more volatile surrounding the Federal Reserve meeting later this month. The price of oil rose after Saudi Arabia reaffirmed their commitment to restricting exports.

Economic Data

Few economic indicators released last week. Quarterly GDP growth in the Euro area was lower than expected at -0.1% versus 0.3%. Annual GDP growth in Japan was also lower than expected but still strong at 4.8%. Inflation in Germany is still high coming in at the expected 6.1%. Several economic indicators are set to release this week with the consumer price index, a key measure of inflation, releasing Wednesday. The producer price index, a measure of inflation for US businesses rather than consumers, will release the following day.

Equities

The US equity market had a mixed week after being closed on Monday for Labor Day. The S&P 500 fell about 1%, but as of Monday the index has recovered some losses and is now down only about 0.5%. The Nasdaq-100 fared slightly better and is now flat for the week. Apple is set to unveil the iPhone 15 on Tuesday of this week and recently announced the extension of a deal with semiconductor manufacturer Qualcomm. This Monday Morgan Stanley massively upgraded their price target for Tesla causing the electronic car manufacturer’s stock price to increase over 10%.

Fixed Income

US treasury rates changed little last week though may become more volatile as the Federal Research meeting on September 20^th approaches. Futures markets are predicting only a 3% chance of a rate increase at the next meeting, but a much higher 46% chance of a rate increase by December. Speculation over the current state of regional and local banks has driven the price of commercial bonds slightly lower due to these banks heavy exposure to debt relating to commercial real estate.

Commodities

Oil prices continue to rise as Saudi Arabia has maintained a commitment to restrict exports. Iran and Russia have also maintained restrictions although they are currently forced to sell mainly to China due to foreign sanctions. Natural gas prices continue to fall as the more mild-weather fall season begins. Gold prices also fell as demand continues to decrease for the inflation hedge. The price of silver followed the same pattern after strong performance the previous week.

Interesting Articles

• CNBC: Tesla shares soar 10% after Morgan Stanley upgrade
• Bloomberg: The Mighty American Consumer Is About to Hit a Wall, Investors Say
• Wall Street Journal: Real-Estate Doom Loop Threatens America’s Banks

All data and figures in this article were collected from YCharts, Inc. on 09/11/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies. 

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

Economic indicators released this week painted the impression that the US economy is still fairly strong, but slowing down quicker than expected. US Equity and Fixed Income markets were closed Monday during Labor Day which likely contributed to a slightly less volatile week than normal. This is a common occurrence surrounding some bank holidays like Labor Day because of increased vacation and travel. Emerging markets were impacted by both the potential default on debt from a major Chinese real estate developer and strong economic growth in India. Oil prices continue to slowly rise due to OPEC’s commitment to restrict supply.

Economic Data

Several major US economic indicators released this week. On Tuesday, second quarter GDP growth came in at 2.1% versus the expected 2.4%, but ahead of the first quarter’s growth of 2.0%. While the economy is still strong this is a potential sign it’s cooling down slightly faster than economists previously expected. The Personal Consumption Expenditure Price Index measure of inflation released at the expected 3.3%. Core PCE, which excludes food and energy prices, also released at the expected 4.2%. Unemployment was slightly higher than expected at 3.8% versus the predicted 3.5%. All these indicators were neutral or negative but contributed to a mild market rally because of an expectation that the Federal Reserve will now have a more difficult time justifying further rate hikes.

Equities

US Equity markets had another strong start this week with an over 1.5% gain in the S&P 500 on Monday alone. Equity markets were fairly flat through the rest of the week with only a mild decrease Friday. This is a common occurrence around bank holidays like Labor Day because market volume tends to significantly decrease with many people traveling or on vacation. Emerging markets struggled partially due to fears that Country Garden, one of China’s largest property developers, would not be able to afford previously delayed interest payments on foreign issued bonds. The company has now succeeded in making interest payments on these bonds and emerging markets have recovered, assisted by strong GDP growth in India.

Fixed Income

US rates were again largely unchanged this week but dropped very slightly after inflation data released. Investors have become more optimistic that peak interest rates have already been reached with futures markets predicting only a 5% chance of a rate increase at the next Fed meeting later this month and a 39% chance of one before the end of the year. Rate decreases are now predicted as early as the May 2024 meeting. GDP growth was slightly below forecast in Mexico at 3.6% and significantly below forecast in Canada at -0.2%. Reduced foreign trade is unlikely to benefit the US economy overall but could play a part in helping bring inflation down.

Commodities

OPEC continues to restrict supplies, pushing oil prices to their highest point in 2023 although they still remain close to the long-term average. Natural gas prices were essentially flat despite several countries still enforcing sanctions on Russia due to the ongoing war in Ukraine. Russia is currently the second largest supplier of liquified natural gas to Europe, behind only the US. The price of gold increased very slightly, counteracted by a mild decrease in the price of silver. Despite this both commodities remain above their one-year average.

Interesting Articles

• CNBC: Saudi Arabia to extend voluntary cut of 1 million barrels per day until the end of the year
• Financial Times: EU imports record volumes of liquefied natural gas from Russia
• Wall Street Journal: The Cheap Flights of Fall Are Back

All data and figures in this article were collected from YCharts, Inc. on 09/05/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. 

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

Jerome Powell and other members of the Federal Reserve spoke at the Jackson Hole Symposium this week and his remarks were largely unchanged from the messaging at July’s meeting. The equity, fixed income, and commodity markets were fairly stable last week with most prices ending Friday at close to same levels as market open Monday. This Thursday the Personal Consumption Expenditure Price Index measure of inflation is set to release. This economic indicator is especially important because it’s the inflation measure that the Federal Reserve pays closest attention to. Futures markets are predicting that peak interest rates are close to being reached with the potential of one more increase by the end of the year, before lowering some time in 2024 or early 2025.

Economic Data

US durable goods orders dropped 5.2% this month, below the forecasted 4% drop and a potential sign that the economy is slowing down as the Federal Reserve hopes. Consumer sentiment was also slightly below the forecast at 69.5 versus 71.2. The main topic of discussion this week were the statements made by Fed Chair Jerome Powel and other members of the Federal Open Market Committee at the annual Jackson Hole Symposium. In a speech on Friday Powell remained consistent with previous statements and stated that further rate hikes this year are still a possibility. However, futures markets are only predicting a 53% chance of a rate increase by the December Fed meeting. The Personal Consumption Expenditure Price Index, the Fed’s preferred measure of inflation, is set to release on Thursday and will have a large influence the Fed’s decision on where to set rates going forward.

Equities

The equity market started the week strong with a 1.7% gain in the S&P 500 from market open Monday until mid-day Thursday. However, there appeared to be some fear over potential volatility surrounding Fed Chair Powell’s speech and by market close on Thursday prices had returned to Monday’s levels. Equity markets reacted surprisingly well to Powell’s speech on Friday ending the day up 0.37% despite Powell’s insistence that further rate hikes were still on the table. One major topic of discussion this week was Nvidia’s earning report. The chipmaker released explosive earnings, doubling revenue from a year earlier due to heavy involvement in the booming AI industry. This boosted both the Nasdaq 100 and S&P 500 and contributed heavily to market gains Wednesday morning. Nvidia is now the sixth largest company in the world surpassing even Warren Buffett’s Berkshire Hathaway in market cap.

Fixed Income

Us rates were largely unchanged this week though the long-term end of the yield curve did drop slightly, a potential sign that investors believe rate increases will soon be coming to an end. Investor sentiment appears to imply we are already at or nearing peak interest rates in the US, but that the Federal Reserve may keep rates high for longer than previously expected with cuts coming some time in 2024 or early 2025. On Thursday Turkey’s central bank increased rates 7.5% to a staggering 25% in an attempt to boost their struggling currency, the Lira. In comparison to the US Dollar the Lira has lost over 30% of its value this year alone with most losses occurring in July. Turkey has struggled heavily with inflation in the post-Covid era and inflation rates in the country reached over 85% last year.

Commodities

Oil prices dropped slightly in the first half of last week but returned to roughly $80.00 by Friday. While Saudia Arabia and OPEC have continued to restrict supplies, slow economic growth in China has reduced demand and largely offset this. The threat of a union strike at several major facilities in Australia has caused the price of natural gas to be slightly more volatile than normal, but both sides appear to be close to reaching an agreement. The price of gold and silver rose slightly, reversing some of the decrease from earlier this month.

Interesting Articles

• CNBC: European markets close lower as Nvidia-led rally fades ahead of Jackson Hole
• Wall Street Journal: Mortgage Rates Hit 7.23%, Highest Since 2001
• Bloomberg: Powell Is Using Jackson Hole as Final Push in Inflation Fight

All data and figures in this article were collected from YCharts, Inc. on 08/28/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss. 

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

US retail sales rose 0.7% in July and several major retailers have recently reported higher than expected earnings. Canada, the UK, and Japan all reported higher than expected inflation metrics and these combined factors led to an increase in the expectation that the Federal Reserve will raise rates another time before the end of this year. Despite this, equity markets are still far above the lows reached in March 2020. Oil prices remained consistent after reaching nine-month highs earlier this month as a result of continued supply cuts by Saudi Arabia.

Economic Data

US retail sales data for July was released on Tuesday, showing a 0.7% increase from June versus the expected 0.4%. June’s data was also revised up from 0.2% to 0.3%. Amazon, Walmart, Target, and Home Depot have now all reported higher than expected earnings for this quarter with Amazon stating they recently had their strongest day of sales in the history of the company. Canada, the UK, and Japan all reported slightly higher than expected inflation and Japanese GDP growth was almost twice the forecast at 6%. These factors increased fear that the economy may not be cooling quickly enough and that the Federal Reserve may decide to keep interest rates higher for longer than previously expected.

Equities

The S&P 500, Nasdaq 100, and Dow Jones Industrial Average all fell last week because of an increased expectation that the Federal Reserve will increase rates another time this year. Chairman Powell and other FOMC members have repeatedly stated that another hike may be coming before interest rates reach their peak, but futures markets were previously predicting very little chance of this actually occurring. Markets are now predicting a slightly over 40% chance of a rate increase by the November Fed meeting. Nearly all companies in the S&P 500 reported strong earnings this quarter, but investors seem to believe they market may have got ahead of itself as the bull market that has lasted since the beginning of this year appears to be coming to an end.

Fixed Income

On Tuesday Russia’s central bank raised interest rates 3.5% to 12% in a surprise decision in an effort to support the price of the ruble. China chose to move in the opposite direction, reducing its one-year rate from 3.55% to 3.45% in an effort to boost their struggling real estate sector. The economic data released last week has fed into what some have referred to as a “good news is bad news” mentality. A strong economy is good for the US in the short term, but it also means that the Fed’s fight to get inflation back to their 2% target may not happen as fast as the central bank hopes.

Commodities

Oil prices remained fairly consistent last week after reaching nine-month highs earlier in the month. Saudi Arabia and Russia have continued to restrict supplies despite already high prices, though prices are still far below the highs reached in June of last year. Natural gas prices were also largely unchanged as the heat waves that previously plagued the country have begun to moderate. The price of gold and silver have continued to slowly decrease after the US reported lower than expected inflation rates earlier this month.

Interesting Articles

• CNBC: Walmart raises full-year earnings forecast as grocery, online growth fuel higher sales
• CNN Business: China disappoints investors with ‘underwhelming’ decision on key interest rate
• Wall Street Journal: Is It Time to Worry About Consumer Debt? What Is Going On in Seven Charts

All data and figures in this article were collected from YCharts, Inc. on 08/21/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market. 

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. 

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

Several key economic readings released this week hint that interest rate increases may finally be taking effect and slowing the economy down, although unemployment remains low. Key US inflation measures will be releasing later this week that will shed light on if the Federal Reserve’s battle with inflation is over, or if further rate increases may still be needed. Equity markets had their worst week since March but regained some losses at market open Monday morning. Futures markets are still predicting little chance of Fed hikes this year and long-term rates rose slightly, marking some progress in reversing the yield curve’s inverted state.

Economic Data

On Monday core Eurozone inflation released at 5.5% year-over-year, slightly above the forecast of 5.4% and consistent with last month’s report. However, Eurozone GDP growth came in above expectations at 0.6% year-over-year versus the predicted 0.5%. US Non-Farm Payrolls released Friday below the 200k expectation at 187k, while June’s numbers were revised down to 185k from 209k. We may be beginning to see signs of the economy slowing down as the major rate hikes from several central banks finally take effect, meaning peak interest rates in the US may have already been reached. However, unemployment remains low at only 3.5%, under the forecast and below last month’s reading of 3.6%. Both the Consumer and Producer Price Index measures of US inflation will release this week which will shed light on the Fed’s direction going forward.

Equities

The S&P 500, Nasdaq 100, and Dow Jones Industrial Average all fell last week having their worst week since March after strong performance over the previous month. However, the indices are far above the market bottom in September of last year and are still very close to the all-time highs reached at the beginning of 2022. Some of last week’s losses have already been reversed as of market open Monday morning after strong earnings reports by Berkshire Hathaway and Boeing. About 85% of the companies in the S&P 500 have now reported quarterly earnings and 80% of those companies exceeded Wall Street forecasts, marking a stronger earning season overall than expected. In general investors seem cautiously optimistic as they await the release of inflation data later this week.

Fixed Income

The Bank of England followed the Federal Reserve and increased interest rates by one quarter of a percent on Thursday. The US yield curve was mostly unchanged although long term rates rose slightly, slowly inching towards a reversal of the inversion that the US has faced since the middle of last year. Futures markets are predicting about a 10-15% chance of a hike at the Fed’s September meeting and about a 25-30% chance of a hike by the end of the year, although this may change following the release of economic data later this week. 

Commodities

WTI and Brent crude oil prices have been slowly increasing since the end of June although they still remain far from the highs reached last year following the Russian invasion of Ukraine. Natural gas prices have remained fairly consistent and are also far below the $7.00-$9.00 range reached during the same period. Gold and Silver also changed little in price following the slight increase the week before after the Federal Reserve announced its rate decision.

Interesting Articles

• CNBC: Fitch downgrades U.S. long-term rating to AA+ from AAA
• Wall Street Journal: Car Dealer Markups Helped Drive Inflation, Study Finds
• CNBC: Amazon reports blowout profit, beats on sales and issues optimistic guidance

All data and figures in this article were collected from YCharts, Inc. on 08/07/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. 

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

On Wednesday the Federal Reserve announced an expected rate increase of 0.25%. Equity markets rallied on Friday following a positive release of the Personal Consumption Expenditures measure of inflation. The European Central Bank also announced a rate increase, but investors appear to be becoming more and more optimistic as inflation rates continue to fall in most major economies while employment metrics and consumer confidence remain strong. For the first time in two years wages are growing at a faster rate than inflation. Oil prices continue to creep up with WTI now above $80 a barrel while natural gas fell slightly as heat waves begin to moderate in the northeast.

Economic Data

On Wednesday the Federal Reserve raised interest rates by one quarter of a percent to 5.5% as expected. The European Central Bank followed suit and also raised rates by a quarter of percent to 4.25%. Fed Chair Jerome Powell made it clear that another rate increase at one of the three remaining Fed meetings this year is still a possibility, though futures markets are currently predicting only about a 30% chance of another hike before cuts begin in the first half of next year. On Friday the Personal Consumption Expenditure Price Index was released and showed year over year inflation at just 3.0%, finally within range of the Fed’s 2% goal. Core PCE inflation also came in below expectations at 4.1% down from 4.7% in May.

Equities

The S&P 500 rose slightly over 1% last week as investors were seemingly unbothered by rate hike announcements by both the Fed and ECB. Markets reacted especially positively to the PCE inflation announcements with the bulk of gains coming Friday morning. The NASDAQ-100 and Dow Jones Industrial Average were also both up for the week and equity markets are finally creeping closer to the all-time highs achieved in late 2021. Investors appear to be becoming increasingly optimistic that the Fed will be able to successfully curb inflation while avoiding a potential recession.

Fixed Income

Short term rates were largely unchanged last week while long term rates rose slightly following the Fed’s rate increase announcement. The yield curve remains heavily inverted with 2-year Treasuries yielding nearly a full percent more than their 10-year counterparts. The Bank of Japan kept rates unchanged and is still the only major central bank offering negative short-term yields. Unlike most developed economies Japan is currently suffering more heavily from slow economic growth than inflation and government officials stated a commitment to keeping borrowing costs low in hope of boosting investments in domestic businesses. Futures markets are predicting that US short term rates will stay consistent for the rest of the year before being lowered at either the March or May Fed meeting in 2024.

Commodities

WTI and Brent oil prices continue to creep up following announced inventory cuts by Saudi Arabia and continued sanctions on Russia by the US and most other western nations. Natural gas fell slightly last week as the end of the heat waves plaguing most the US seems to finally be in sight. Gold and silver prices fell sharply Thursday morning following the Fed announcement but recovered Friday with gold now re-approaching its all-time high.

Interesting Articles

• CNBC: Fed approves hike that takes interest rates to highest level in more than 22 years
• CNN Business: The Fed’s favorite inflation measure cooled down even further in June
• Wall Street Journal: Pay Raises Are Finally Beating Inflation After Two Years of Falling Behind

All data and figures in this article were collected from YCharts, Inc. on 07/31/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

Equity and fixed income markets were fairly quiet this week as investors await the Federal Reserve meeting this Wednesday. It’s widely expected that the Fed will raise interest rates by another quarter of a percent, but perhaps more important is the Fed’s outlook for the rest of the year. The Fed’s press conference is likely to shed light on whether rates will rise another time this year as Powell previously suggested, or if this is the peak with inflation seemingly coming under control. Oil and Natural gas rose slightly due to ongoing heat waves and hopes of Chinese government stimulus. The European Central Bank and Bank of Japan are also set to announce their interest rate decisions this week.

Economic Data

Both New Zealand and the Euro Area reported inflation metrics last week that were very slightly above forecasts, but not enough out of line to cause any significant fear. The Euro Area has struggled to get inflation under control, but core rates are now starting to approach US levels. Euro Area core inflation was 5.5% year over year compared to 4.8% in the US. Canada also reported inflation metrics last week and is at only 2.8% year over year, in line with the US headline rate. US retail sales are still growing monthly but came in slightly below forecasts, while building permits were also slightly lower than expected. US PCE, the Fed’s preferred measure of inflation, releases this Friday and will have a large impact on the Fed’s decision to either hike or pause at September’s meeting.

Equities

The S&P 500 rose slightly last week but was mostly flat with growth of only 0.6%. The NASDAQ-100 started the week strong but retraced all gains Wednesday through Friday, resulting in a loss of 1.1%. Much of this was driven by a special rebalance of the index’s weights which goes into effect today. A special rebalance of the NASDAQ-100 is triggered when only a few companies make up over 48% of the overall index, which recently occurred following the extremely strong performance of tech giants like Apple, Microsoft, Google, Nvidia, Amazon, and Tesla. The Dow Jones Industrial Average performed well last week and ended Friday up 2.1%. Markets will likely be slightly more volatile than average this week as normal during periods surrounding a Fed decision. 

Fixed Income

Short term interest rates continue to rise on the expectation that the Fed will increase rates by a quarter of a percent at Wednesday’s Fed meeting. The futures’ market is in near unanimous agreement about this predicting only a 0.2% chance of the Fed deciding to pause rates at this meeting. Long term Treasury rates fell slightly as although a rate hike is expected, markets seem to believe that this will be the peak rate with no more hikes to follow this year. The European Central Bank and Bank of Japan are also set to meet this week, with the ECB expected to follow the US in increasing rates by a quarter of a percent and the BOJ expected to keep rates flat.

Commodities

Gold rallied early last week before retracing most of its gains on Thursday and Friday. However, this still marks the third week in a row gold has ended with a positive return. Natural gas rose 6% as both North America and Europe have continued to be affected by some of the strongest heatwaves in years. Despite this, natural gas prices are still much lower than they were in the previous two summers, due to large stockpiles after an unusually warm winter and an increase in output from renewable energy in large states like California and Texas. Oil prices rose slightly out of hope that the Chinese government will implement further stimulus after weak GDP growth in the second quarter.

Interesting Articles

• Morningstar: Nasdaq Changes: Tech's Magnificent Seven Force Rebalance
• Wall Street Journal: Why This Heat Isn’t Cranking Up Your Gas Bill
• Fortune: The bear market is dying after less than 20 months as almost $10 trillion floods back into equity values

All data and figures in this article were collected from YCharts, Inc. on 07/24/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. 

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content. 

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

Both the consumer and producer price indices came in lower-than-expected last week, boosting equity markets and slightly lowering long term rates. The Federal Reserve was previously expected to raise rates at both the July and September meetings, but the futures market is now predicting rates will peak in July and begin to decrease sometime early next year. Slowing inflation combined with low unemployment and strong earnings by several major banks are alleviating fears that the US economy is entering a recession.

Economic Data

The Consumer Price Index inflation measure released Wednesday at 3%, slightly below the forecast of 3.1%. Core inflation, which excludes food and energy prices, also came in below estimates at 4.8% versus the expected 5%. The Producer Price Index released the following day at only 0.1% year over year. PPI is often considered a leading indicator for overall inflation because companies tend to pass higher prices on to customers, so this is some additional good news for the average consumer. We are now only 1% over the Fed’s year over year inflation target and a so called “soft landing” is appearing to be a more and more possible outcome.

Equities

The S&P 500 rose roughly 2.5% last week following the good news on inflation while the NASDAQ-100 rose 3.6%. Several major banks like JPMorgan Chase, Wells Fargo, and Citigroup released earnings last week and all performed better than expected, increasing optimism about the current state of the US financial sector. Equity markets are finally re-approaching the all-time highs reached at the beginning of 2022 and investors seem to believe the US economy is still strong despite the expectation of one or two further rate increases.

Fixed Income

Long term rates dropped slightly last week with the 10 and 30-year now back below 4%. Futures markets are still predicting that the Fed will raise rates by another 0.25% at the July 26^th meeting. Powell has previously indicated that a further hike could come in September, but markets are also predicting July’s rates will be the peak and that cuts could begin as early as January or March of next year. Personal Consumption Expenditures, the Fed’s preferred measure of inflation, will release two days after the next Fed meeting and provide further insight on what to expect from the Fed in the rest of the year.

Commodities

Oil prices rose slightly last week but returned to previous levels after Chinese GDP growth came in lower than expected. China is the world’s biggest importer of oil, and their manufacturing-based economy continues to struggle to recover following the removal of many Zero Covid policies. Natural gas prices fell after several previously closed Norwegian gas fields returned from maintenance. Norway is now Europe’s largest natural gas supplier and prices over the next several months are likely to hinge on how severe the weather is this winter.

Interesting Articles

• The Hill: Biden administration announces $39 billion in student debt relief for 804,000 borrowers
• CNBC: Inflation rose just 0.2% in June, less than expected as consumers get a break from price increases
• Business Insider: Mexico replaced China as America's top trade buddy — and it shows how the global economy is rapidly transforming

All data and figures in this article were collected from YCharts, Inc. on 07/17/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

Unemployment remains strong though the US economy is beginning to show signs of a slowdown after a lower-than-expected increase in jobs in June. Markets are cautiously awaiting the release of key inflation metrics later this week that are likely to guide the Fed’s monetary policy decisions over the rest of the year. The Q2 earnings season kicks off this week which will also provide further insight into the current state of the US economy.

Economic Data

Non-Farm Payrolls came in at 209k underperforming the forecast of 225k, the lowest increase in jobs in two and a half years. Despite this, unemployment remains strong matching the predicted 3.6%, down from 3.7% in May. A slowdown in job growth implies the Fed’s tightening policy is working which could mean rate cuts coming earlier than previously expected. ISM Manufacturing PMI was only narrowly below forecasts, while Services PMI surprised on the upside at 53.9 against a forecast of 51. Overall, the US economy is showing signs of resilience though fear of a potential recession remains.

Equities

The S&P 500 fell slightly over 1% last week reversing some of the gains since late June, although the index is still up over 15% year-to-date. All eyes will be on inflation this week with the Consumer Price Index releasing Wednesday and the Producer Price Index releasing the following day. Most major US companies will be releasing Q2 earnings over the next several weeks which could lead to some increased volatility in the markets and help provide additional clarity on to what extent the economy is slowing down.

Fixed Income

The yield curve changed little last week and remains heavily inverted. The 3-Month, 2-Year, 10-Year, and 30-Year all rose slightly on the expectation of a hike at the next Fed meeting. Futures markets are currently predicting an over 90% chance of a rate increase at the July 26 meeting and a rate cut is not expected until at least May of next year. CPI figures releasing on Wednesday, along with earnings reports from several major banks like JPMorgan Chase and Citigroup this week, are likely to heavily influence the Fed’s rate decision and path over the next several months.

Commodities

Oil prices rose slightly last week but returned to previous levels Monday morning as demand in the US and China is expected to decrease. Losses were slightly offset by expected crude supply cuts from Saudi Arabia and Russia. China is currently facing the opposite economic struggle as the US with year-over-year inflation coming in at 0%. China has continued to struggle with economic growth following the slow removal of many zero-COVID policies.

Interesting Articles

• CNBC: Britain is now the only major economy where inflation is still rising
• Reuters: Saudi Arabia says new oil cuts show teamwork with Russia is strong
• Yahoo Finance: Workers are still raiding their retirement savings at record rates

All data and figures in this article were collected from YCharts, Inc. on 07/10/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

There was an overwhelming set of positive economic data last week that resulted in the 2-year increasing to just below 5% for the first time since March. The positive data helped stocks rally throughout the week despite the increase in interest rates, and the S&P 500 finished the first half of the year with a gain of 16.8%. It is now just 5% away from the all-time high set on January 3, 2022.

Economic Data

Durable goods orders kicked off the week and surprised to the upside. Orders grew by 1.7% in May compared to expectations of a 1% contraction. First quarter GDP also surprised to the upside with 2% growth. Potentially the best news of the week was in the Personal Consumption Expenditures release on Friday, which is the Federal Reserve’s preferred inflation measure. The PCE Price Index for May grew 3.8%, its lowest level since April 2021. We are now just 1.8% away from the Fed’s 2% inflation target.

Equities

The S&P 500 increased by 2.3% on the positive economic data released during the week and finished the second quarter with a total return of 8.7%. The narrative for the stock market was a bit different last week than it has been in recent memory. Over the past two years, it has seemed that strong economic news was bad for the stock market as it generally meant that the Federal Reserve would increase interest rates higher and faster than expected. Now that rates are very near the top of the Fed’s expected peak, it appears that the stock market is taking the good news as good news and is rallying when positive economic news is announced.

Fixed Income

Interest rates increased across the curve on the strong economic data releases. The curve remains very heavily inverted as markets expect at least two more interest rate increases in the short-term from the Federal Reserve, with the next increase coming this month. The 3-month interest rate is at 5.33%, which is 1.47% higher than the 10-year. The yield curve has now been inverted for fifteen months.    

Commodities

The EIA announced last week that US total petroleum production hit an all-time high in April, which helps provide context to the continued price weakness in oil relative to a year ago. Russia, Venezuela, and Iran have all been under heavy sanctions from the US and Europe related to oil production, but this has not dampened their actual output and has instead rerouted the supplies to other countries, such as China. China’s demand forecast continues to increase as the country slowly reopens from three years of strong COVID lockdowns, and this demand has been met with additional supply primarily from Russia.

Interesting Articles

• CNBC: Key Fed inflation measure shows prices rose just 0.3% in May
• Ben Carlson: What Happened to the Recession?
• Nick Maggiulli: How to Spend More in Retirement

All data and figures in this article were collected from YCharts, Inc. on 07/03/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value. 

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law. 

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

Last week was relatively quiet from an economic data and market event standpoint, with no major releases in either category. Absent any major headlines, global markets traded lower, and emerging markets led the way down nearly 5% on the week. Over the weekend, there was news from Russia of a potential coup against President Putin, which could have a major impact on commodity markets going forward. However, oil remains around the $70 mark for now.

Economic Data

There were no major economic releases last week in the US, but the UK did release its inflation report for May and it continues to be higher than expected. Inflation in May for the UK was 8.7%, which was the same level as April. Inflation in the UK peaked at 11.1% in October 2022 and has fallen 2.4% in the seven months since. US inflation peaked at 9.1% in June 2022 and fell by 2.7% in the seven months after its peak. The UK has lagged the US in both the peak and the recovery from high inflation, but it does appear to be on a similar trajectory downward for now.

Equities

The S&P 500 decreased by 1.7% in the week but enters the final week of Q2 up 14% in 2023. It is another light week for economic data releases, and earnings season for the second quarter is still about a month away.  Second quarter earnings are expected to decline by 6.5%, which would be the largest decline in earnings since Q2 2020.

Fixed Income

Interest rates were flat on the week absent any major news, and the 2-year remains just below 5%. The yield curve has now been inverted for 16 months, and it will likely remain inverted for some time as the 10-year is still 1.02% below the 2-year. The 3-month interest rate is even higher than the 2-year at 5.33% as markets are currently expecting the Federal Reserve to increase interest rates two more times in 2023.   

Commodities

Oil remains just below $70 a barrel despite significant turmoil in Russia over the weekend. There was an attempted coup in Russia by a Russian general, which marks the first challenge to Putin’s power from an attempted coup since 1993. The war in Ukraine has lasted significantly longer than many expected. While oil has been able to stabilize and is down roughly 37% from one year ago, it is still vulnerable to disruptions from Russia as Russia remains one of the largest oil producers in the world despite significant sanctions from the US and Europe.

Interesting Articles

• WSJ: What Oil Analysts Think About Russia's Weekend Rollercoaster
• Bloomberg: Putin Faces Historic Threat to Absolute Grip on Power in Russia
• CNBC: Brits are facing a major mortgage crisis as lending rates soar

All data and figures in this article were collected from YCharts, Inc. on 06/26/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries. 

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

The Federal Reserve elected to keep interest rates at 5% at their meeting on Wednesday. After some initial volatility following the announcement, stocks finished with their strongest week since March and are up nearly 8% in the second quarter. Interest rates have stayed relatively calm, and it appears that the brief banking crisis from earlier in the quarter has been resolved. All of these factors have led to an incredibly strong market, which is now up 25% since the October 2022 bottom.

Economic Data

Both consumer and producer price indices were released ahead of the Fed meeting on Wednesday, and both continue to show a significant deceleration in prices. CPI was 4% during May, its lowest level since March 2021, and PPI was just 1.1%. CPI has fallen for 11 straight months, while PPI has fallen for 14 straight months. Both inflation readings are incredibly positive, and economists believe there is only positive news ahead as well. Shelter, which makes up over a third of CPI’s weight, is expected to begin falling in the third quarter as it is known to be on a roughly 12–18-month lag compared to the rest of the index. If this holds true, there is a possibility that inflation is actually below 2% by the end of the year.

Equities

The S&P 500 increased by 2.6% last week and is now up 15.8% on the year. The market sentiment has been overwhelmingly positive, as earnings, inflation, and interest rates have all provided a boost to markets in the quarter.

Fixed Income

Interest rates have slowly climbed higher in the last few weeks. The 2-year reached a relative low of 3.73% on May 4 and is now 0.99% higher at 4.72% just over a month later. As the banking crisis fades further into the rear view mirror, interest rates have inched higher as the appetite for risk assets has increased. Also helping short-term rates was the dot-plot from the Fed’s Wednesday meeting, which shows they expect to increase interest rates two more times this year despite moderating inflation. It is a puzzling move from the Fed, which saw producer prices increase by just 1% in May, with consumer prices expected to continue dropping the rest of the year. But the Fed seems very determined to stop inflation, and does not seem to care what pain they may cause to the economy in their quest to do so.

Commodities

After a rambunctious 2022, commodities have been incredibly calm in 2023. Oil remains in the $70-range at $71.62 a barrel, and natural gas has only traded above $3 for one trading day since February.

Interesting Articles

• CNBC: Fed holds off on rate hike, but says two more are coming later this year
• WSJ: Why Inflation Around the World Just Won't Go Away
• Financial Times: ECB increases interest rates to highest level since 2001

All data and figures in this article were collected from YCharts, Inc. on 06/05/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content. 

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. 

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

The May jobs report on Friday helped boost stocks to a weekly gain of over 3%, but interest rates remained relatively flat. Markets expect the Federal Reserve to pause their interest rate hikes in their June meeting, but increase by another 25 basis points in July. The labor market has been very resilient during this tightening cycle, which has given the Fed more confidence that they can continue their interest rate increases without impacting the overall economy.

Economic Data

The May jobs report was a goldilocks report for the stock market. Payrolls increased by 339,000, which was significantly higher than expectations of 190,000. At the same time, wage growth came in slightly lower than expectations, and the unemployment rate increased. If payrolls can grow while the unemployment rate increases, that typically means that more workers are entering the labor force. When this happens, it is interpreted as a positive sign because it means that workers believe the labor market is strong and they want to participate. When combined with lower than expected wage growth, this could be interpreted as one of the best employment reports that the market has seen during this tightening cycle.

Equities

The S&P 500 increased by 3.2% last week, led by a 1.5% gain on Friday to close out the week after the strong employment report.  The S&P 500 is now up over 12% in 2023 and is now up 4.2% on a year-over-year basis. Despite the strong start to the year, it is still nearly 9% below the all-time highs set in January 2022. Small-caps outperformed large-caps last week, rising 4.4%.

Fixed Income

Interest rates were relatively unchanged last week despite the strong jobs report on Friday. The 2-year began the week by falling from 4.58% to 4.35%, but increased 21 basis points on Friday to finish the week at 4.56%. Markets have now assigned a 70% probability on another interest rate increase in July, as economic data continues to be stronger than expected.

Commodities

Oil began the week by dropping from about $73 a barrel to $67, which was its lowest level since the short-lived banking crisis in March. However, news that Saudi Arabia is planning another production cut boosted the price and oil is now trading above $73, a nearly 10% increase from the lows last week. The price does remain significantly lower than a year ago, when oil was trading at $119 a barrel at the beginning of the 2022 summer travel season.

Interesting Articles

• CNBC: Payrolls rose 339,000 in May, much better than expected
• WSJ: Why Your Steak Is Getting Pricier
• Bloomberg: Oil Rises on Saudi Arabia's Go-It-Alone July Production Cuts

All data and figures in this article were collected from YCharts, Inc. on 06/05/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

Stocks rallied to nearly 10% year-to-date gains last week as regional banks led the charge with a 7.7% gain. Western Alliance Bancorp announced that deposits have grown by more than $2 billion since the end of the first quarter, marking a sharp turnaround from the regional bank deposit decline in March. The regional bank rally was aided by Federal Reserve Chair Jerome Powell on Friday, who said that he believed that interest rates may not have to rise much more to tame inflation. This was another sign that the Fed might be done raising rates for the time being.

Economic Data

It was a light week in economic data last week. Retail sales for April sharply missed expectations with a moderate 0.4% month-over-month expansion, while the March number was revised much lower to a 0.7% contraction. Despite this weakness, the Atlanta Fed’s GDPNow tracker for the second quarter is currently expecting a very robust 2.9% growth.

Equities

The S&P 500 increased by 1.7% last week, but small-caps still underperformed with a 1.6% gain on the week despite a nearly 8% rally in regional banks. First quarter earnings releases have been better than expected, and upside revenue surprises are above their 10-year average. This shows that despite seemingly negative sentiment in the markets going into the quarter, companies performed very well and these earnings have helped propel the stock market to a 9.9% YTD gain. Stocks are now up 9.2% on a one-year basis.

Fixed Income

Interest rates increased last week as the risk-on sentiment returned to markets, which stocks gaining and bonds losing. The increase in interest rates can be interpreted as a good thing for the overall health of the market. Interest rates decreased substantially following the initial shock of the banking crisis, as markets began to price in a potential financial crisis as a result of the banking turmoil. Now that it appears the banking crisis is over for the time being, stocks have rallied and interest rates have increased.

Interesting Articles

• CNBC: Fed Chari Powell says rates may not have to rise as much as expected
• Bloomberg: Regional Bank Stocks Bounce for Strongest Rally in Two Years
• Ben Carlson: What's the Best Long-Term Investment?

All data and figures in this article were collected from YCharts, Inc. on 05/22/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends. 

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies. 

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

This report was prepared by Blue Ridge Wealth Planners, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Blue Ridge Wealth Planners Form ADV Part 2A & 2B can be obtained by going to www.adviserinfo.sec.gov. and searching the firms name. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice.

Weekly Summary

Stocks continued their recent downward slide last week despite better-than-expected inflation data. The banking crisis remains the focal point for markets, as regional banks dropped by another 7% last week and are now down 38% in 2023.

Economic Data

The April inflation report was slightly better than expected but was seen as a sigh of relief for markets following the very strong jobs report. Inflation stood at 4.9% for the month, marking the second consecutive month below 5%. More importantly, the focus now shifts to June's inflation data, as economists anticipate that the shelter component of the Consumer Price Index (CPI) will start significantly impacting the headline number.

Equities

After a 6.5% rally from March 10 to March 31, stocks have only gained 0.5% since the beginning of the second quarter due to the persistent banking crisis. While there haven't been any major developments in the banking sector, traders continue to scrutinize data in an attempt to identify the next bank at risk. This concern has primarily affected small-cap stocks, which are now down 0.6% for the year, compared to an 8% gain for the S&P 500.

Fixed Income

Similar to stocks, interest rates have remained within a relatively tight range as economic data has generally met expectations, and the Federal Reserve seems to have halted interest rate tightening for now. The relatively calm bond market provides a welcome respite from the extreme volatility witnessed over the past two years, with the two-year rate holding steady near 4% for most of the last two months.

Commodities

Oil prices have remained subdued at $70 per barrel as demand data has surprisingly weakened during what is typically the start of the summer travel season. Inventories at Cushing, Oklahoma, a crucial storage facility for WTI Crude, have significantly increased in 2023, contributing to price stability within the $70-80 range for most of this year.

Interesting Articles

• CNBC: Inflation rate eases to 4.9% in April, less than expectations
• WSJ: The Decline of the Five-Day Commute Is a Boon to Suburban Retail
• FT: Federal Reserve warns of credit crunch risk after US bank turmoil

All data and figures in this article were collected from YCharts, Inc. on 05/15/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

With no major economic data releases last week, markets were relatively quiet last week as we await the next Federal Reserve meeting on May 3.  The first quarter earnings season is underway for stocks, and the results have been mixed so far, contributing to the modest 0.69% return in Q2 2023. Interest rates have slightly increased, but the focus has shifted back to the Fed and the economy ahead of next week’s anticipated interest rate increase.

Economic Data

Last week was relatively quiet regarding economic data. Housing starts were in-line with expectations, and existing home sales and building permits were slightly lower than expected. First quarter GDP is still expected to grow by 2.5%.

Equities

The S&P 500 was flat last week, as the market shifted its focus to earnings season. While 76% of S&P 500 companies have reported positive earnings surprises, the overall growth rate is showing a 6.2% contraction in earnings. Compared to the expected 6.7% contraction, this is relatively good news, but a contraction is still a contraction. The net profit margin for the S&P 500 also contracted again during the quarter, which marks its seventh straight quarterly decline as higher costs continue to eat into the margins of companies across the country.     

Fixed Income

Interest rates were slightly higher across most of the curve, but the 3-month yield remains significantly higher than any other interest rate maturity on the Treasury curve. The 3-month yield is currently at 5.20%. When the 3-month yield is so much higher than the 2-year yield (currently a 1.05% inversion) it means that the market expects the Federal Reserve to cut rates sometime within the next two years. Markets are currently expecting the Fed to hike one more time, and then begin cutting later this year after inflation moderates. Meanwhile, the Fed has rebuffed this notion and maintains its intent to keep interest rates higher for longer to combat inflation. The current 2-year to 3-month inversion means that the market is attempting to call the Fed’s bluff and currently believes the Fed will not be able to hold to their current plan.

Commodities

Oil ticked below $80 a barrel last week, ending the short-lived price bump seen after OPEC announced its surprise cut a few weeks ago. When OPEC tends to announce surprise production cuts, prices do initially increase but then moderate over the weeks after as OPEC very rarely actually cuts as much as they actually do. 

Interesting Articles

• FT: Five takeaways from China's first-quarter GDP data
• Bloomberg Opinion: Get Ready for Lower Fuel Prices - and Slower Inflation
• Bloomberg: Investors Are the Most Bearish on Stocks Versus Bonds Since 2009

All data and figures in this article were collected from YCharts, Inc. on 04/24/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

Markets continued to rally last week, and the S&P 500 is now up 16.7% since it’s October 2022 low. There were two inflation reports that were overwhelmingly positive and first quarter GDP is expected to come in at a relatively strong 2.5% in the first quarter. A strong economy and moderating inflation has now put a soft-landing for the Fed back on the table as it expects to hike rates just one more time in 2023.

Economic Data

The March CPI report was lower than expected at 4.98% year-over-year and was the lowest CPI reading since May 2021. The closely watched month-over-month figure was just 0.1%, which is a sharp decline from the 0.4% MoM reading in February. This report was complemented by a shocking decline in the producer price index, as it decreased by 0.5% in the month. PPI is often seen as a leading indicator to CPI, so this news combined with CPI was incredibly positive.

Equities

The S&P 500 was up 0.80% and is now up 8.27% in 2023. Despite the March banking woes, markets have been able to rally off strong economic data, decelerating inflation data, and the expectation that the Fed will pause its interest rate increases after just one more increase in May 2023. Earnings for the S&P 500 are expected to contract by 6.5% in the quarter, which would be the largest decline for earnings since Q2 2020. This is largely due to margin compression because of increasing costs on companies. Unlike 2021, which saw companies passing on higher costs to consumers, companies are now internalizing the cost increases and taking them on in the form of margin compression instead of passing them onto consumers.

Fixed Income

Interest rates initially ticked lower after the downside inflation surprise, but then increased slightly as markets internalized the near certainty of the Federal Reserve increasing interest rates again at their meeting in two weeks. Barring an unforeseen increase in the inflation rate, it is expected that this will be the last rate increase of this extremely fast tightening cycle as the Fed expects to hold rates above 5% for the time being to let the impact of those higher rates permeate throughout the economy.

Commodities

Oil remains slightly above $80 a barrel after the surprise OPEC cut, but gasoline prices have continued to increase. Gasoline prices are still down about 41 cents a gallon from this time last year, but demand has significantly increased in recent weeks despite the price of oil increasing as well. As demand continues to ramp up for the summer travel season, prices could remain elevated relative to a few months ago.

Interesting Articles

• WSJ: Construction Industry Has Work, Needs More Workers
• CNBC: Here's the inflation breakdown for March 2023
• Bloomberg: Bond Market is Overplaying the Risk of a Deep Recession

All data and figures in this article were collected from YCharts, Inc. on 04/17/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends. 

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market. 

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

Markets were relatively calm across the board last week, partially due to the Good Friday holiday on Friday coinciding with the release of the March jobs report. The jobs report was also uneventful, as it was largely in line with expectations. There are some significant events on the horizon as the March inflation report will be released on Wednesday, and S&P 500 earnings season for the first quarter begins later this week.

Economic Data

The March employment report was in line with economist expectations. The headline payrolls number grew by 236,000 in the month compared with 239,000 expected, while the unemployment rate actually decreased to 3.5% despite a higher labor force participation rate. The overall release is strong, but the headline payrolls number is the weakest in over a year and is sure to be a welcome sign for the Federal Reserve as it signals that hiring might finally be cooling off.

Equities

The S&P 500 was flat last week and the stock market was closed on Friday for the Good Friday holiday, so there were no knee-jerk reactions to the employment data. The focus will be on the first quarter earnings season, which begins later this week. For Q1 2023, earnings are expected to decline by 6.6%, which would be the largest earnings decline since the initial COVID-19 shock in Q2 2022.

Fixed Income

Interest rates remain relatively subdued across the board, and the Federal Reserve does not meet again until May 3. The March employment report and Wednesday’s CPI report are the last two key economic releases before the Fed meets in three weeks, and markets are currently split on whether the Fed will hike again or choose to finally pause interest rate increases.

Commodities

Oil remains slightly above $80 a barrel after the surprise OPEC cut last week, but natural gas has consistently gone down and is now close to breaking a key $2 resistance level. If natural gas were to fall below $2, it would be its first time below $2 since the initial COVID-19 drawdown in early 2020.

Interesting Articles

• FT: US regional banks reduced cash buffers ahead of run on deposits
• Ben Carlson: The Good & Bad of Investing in the Stock Market
• Bloomberg: What's Next for Oil After Surprise OPEC Cuts? Try $100 a Barrel

All data and figures in this article were collected from YCharts, Inc. on 04/10/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited. 

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

Stock markets increased over 3% last week to end with a 7.5% return for the first quarter of 2023. The return number itself is quite surprising when you consider everything that happened during the first three months of the year. The year started off relatively quiet, but the news cycle quickly ramped up with higher than expected inflation in February followed by the Silicon Valley Bank failure. Despite these significant headwinds, stocks rallied and interest rates remained relatively subdued during the quarter to round out what ends up being one of the best quarterly returns for the stock market in recent history.

Economic Data

European inflation continues to surprise to the upside and remains stubbornly high, especially when compared to inflation in the United States. Germany’s preliminary March inflation rate was 7.4% year-over-year and 0.8% month-over-month, both of which were higher than estimates. Contrast this reading to the February PCE for the United States, which was 4.6% year-over-year and 0.3% month-over-month, both of which were lower than estimates.

Equities

The S&P 500 gained 3.45% last week and ended the quarter up 7.46%. No news is good news right now, and it appears that the banking crisis might be over for now. The lack of news combined with positive inflation data caused markets to rally, as both are good signs for the future path of Federal Reserve policy.

Fixed Income

Interest rates have come up slightly since the SVB-induced crisis caused dramatic decreases in interest rates. It is not surprising to see the 2-year back above 4%, as the Fed Funds rate is currently in a target range of 4.75 - 5%. While inflation has continued to slow down, it is still higher than the Fed’s 2% target and thus it would not be surprising to see rates slightly increase as the banking crisis gets further and further in the rear-view mirror.

Commodities

Oil jumped to above $80 as OPEC announced surprise output cuts over the weekend that total about 1.16 million barrels per day, led by Saudi Arabia’s cut of 500,000 bpd.  The surprise move has immediately boosted prices, which have been stubbornly low for some oil producers across the world. The US has not kept up its commitment to refill its strategic petroleum reserve, a move which has angered OPEC nations as that lack of demand has kept prices lower than many expected this year. This is believed to be the primary reason that OPEC announced the surprise cuts, as the cuts would decrease supply and boost prices since the US did not increase oil prices via the expected demand shock from the SPR boost.

Interesting Articles

• WSJ: For Chip Makers, a Choice Between the U.S. and China Looms
• WSJ: Small Banks Are Losing to Big Bank. Their Customers Are About to Feel It
• FT: Shale oil drillers left exposed after pulling back prices hedges

 All data and figures in this article were collected from YCharts, Inc. on 03/31/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%. 

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law. 

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. 

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

Stock markets increased 1.5% last week despite the current banking turmoil and another increase from the Federal Reserve. The Fed took over as the primary focus in the markets after a 25bp rate hike on Wednesday, but banks again dominated most of the conversation and Deutsche Bank became the next bank targeted by investors. There was no material news on the bank, but the bank’s stock dropped by more than 10% on Friday on market fears that it might be the next bank to experience liquidity issues. Despite the Credit Suisse and Deutsche Bank news, stocks rallied and interest rates increased as there was relative calm in the regional banking sector as no new banks experienced significant liquidity pressure.

Economic Data

Year-over-year inflation in the United Kingdom was 10.4% during February, much hotter than the expectation of 9.9%. While US inflation seems to have peaked and has been on steady, albeit slow, deceleration, the 10.4% figure in the UK was an unexpected increase from January and shows that the country still has significant work to do to bring inflation back down.

Equities

The S&P 500 gained 1.5% and is now back up to nearly 4% year-to-date. Regional banks were still down roughly 2.5% last week, but the fact that there was no bank failure or significant negative news was a positive thing. The federal government was able to sell a significant part of Silicon Valley Bank over the weekend, which shows that the SVB failure could be specific to a handful of banks instead of a systemic crisis. Any absence of negative news for banks will be seen as a good and stabilizing force going forward.

Fixed Income

The Federal Reserve increased interest rates again last week, moving by just 25 basis points to a target range of 4.75 - 5%. While Powell did say that the Fed considered pausing rates immediately following the SVB crisis, they decided to go ahead with the move after inflation and employment data remained very strong in the days after the bank failed. The Fed believes that the banking sector is very strong and robust and does not believe that this crisis will become systematic. In fact, the Fed expects to increase rates one more time this year and then pause to determine the overall impact these hikes have had on inflation.

Commodities

Oil and natural gas have stayed in their relatively tight range due to the current banking crisis. Oil has experienced some downward pressure as the Biden administration has approved one of the largest Alaskan drilling projects in recent history. The Biden administration will allow ConocoPhillips to develop 68,000 acres of land in Alaska that are expected to produce 600 million barrels of oil over the next 30 years.

Interesting Articles

• WSJ: It Wasn’t Just Credit Suisse. Switzerland Itself Needed Rescuing.
• John Authers, Bloomberg: Move Along, There’s No Crisis to See Here
• CNBC: Biden Interior Approves Controversial Alaskan Drilling Project

 All data and figures in this article were collected from YCharts, Inc. on 03/27/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results. 

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries. 

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%. 

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends. 

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law. 

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies. 

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

Global stock, bond, and commodity markets experienced extreme turmoil as the current banking crisis spread to European and international banks as well as US regional banks.

Early in the week the focus was on the current state of Silicon Valley Bank, which the federal government had closed on Friday, March 10. Over last weekend, the FDIC and US Treasury stepped in to insure deposits beyond the FDIC $250,000 limit and offered a few different liquidity programs to help banks weather a potential run on deposits. The moves were largely seen as successful, and markets responded very positively early in the week until it appeared that other banks might be in serious trouble.

The next bank to spark fears was the regional bank First Republic, which began to see large deposit outflows after the SVB collapse. A contingency of larger banks, such as JP Morgan, responded by depositing a total of $30 billion at the bank to help the bank stay above water until the run ended. This was essentially a private sector led bailout of a bank, and the stock market responded to this news with mixed results. First Republic’s shares were down a total of 14% last week, but experienced extreme volatility with both gains and losses on individual days of more than 20%. It was down 32.8% on Friday after there were fears that the bailout would not be enough.

The next bank to fall in the puzzle was Swiss bank Credit Suisse, one of the largest banks in the world. Last year, Saudi National Bank purchased roughly 10% of the bank. As the banking crisis accelerated last week, there were market whispers that Credit Suisse was experiencing very large outflows and was at risk of needing assistance.  Saudi National Bank responded by saying they would not be providing any additional assistance to the bank, which then prompted the bank to actually experience large outflows. Over the weekend, the bank agreed to sell itself to Switzerland-based investment bank UBS for $3.2 billion in a very controversial move. The Swiss National Bank had offered assistance to Credit Suisse to help the bank stay afloat, but it appeared that was not enough so the bank agreed to a purchase by UBS.

While this was not a bailout per se, it could be interpreted as a bank failure. That would make it one of the largest bank failures in history, and it is a significant domino to fall in the current banking crisis. One interesting thing to note about the entire crisis is how this money is moving about. Bank runs are self-fulfilling prophecies; once they begin to happen, they speed up a bank’s demise and therefore all but guarantee its failure. Now that we have seen bank runs on many large banks, the next logical question is: where is this money going?

With billions of dollars on the line, it is not something where banks can simply hide it under a mattress. They have to be depositing it somewhere. So the next piece of the puzzle that remains to be seen is where this money is going. It is not everyday people who are causing these bank runs. It is large companies with millions of dollars in the bank. We can only speculate where this money is being deposited at the current moment, but one common belief is that it is simply going into some of the biggest banks in the US that have received implicit government guarantees, such as JP Morgan.

Economic Data

The February inflation report was released last week and was in-line with expectations as year-over-year inflation was 6%, while monthly inflation was 0.4%. Investors largely shrugged off this report as the banking news was the main focus on the week.

Equities

The S&P 500 gained 1.45% last week as it experienced extreme volatility. Regional banks ended the week with a loss of just 2% but had similar bouts of volatility even though the weekly loss was relatively muted. On Friday alone, the regional banking sector lost 6%.

Fixed Income

The 2-year saw its most extreme moves since 2001 last week, as it dropped from 5% to 3.75% in a matter of days as markets expect that the Federal Reserve’s path of interest rates will now be significantly impacted by the current banking crisis. The 10-year is now down nearly a full percent from its recent highs and sits at just 3.36%. The Federal Reserve will make its next interest rate decision on Wednesday, and the current expectation for what they will do is changing nearly every hour. In my opinion, it would be a grave mistake for the Fed to increase interest rates during a banking crisis that has been started partially because they increased interest rates so quickly. However, Jerome Powell believes that he can be the next Paul Volcker in this inflationary environment and appears to be locked in to one goal and one goal only: beating inflation. This is shaping up to be one of the most contentious Fed meetings in recent history.

Commodities

Oil and natural gas continued their recent falls on the back of the current banking crisis, and oil is now down nearly 50% from where it was a year ago.

Interesting Articles

• WSJ: First Republic, SVB, Credit Suisse Show How Higher Interest Rates Caught Up With Banks
• Reuters: S&P cuts First Republic deeper into junk, says $30 billion infusion may not solve problems
• Bloomberg: Fed's New Backstop Shields Banks From $300 Billion of Losses
• WSJ: ECB Raises Rates by Half Point Despite Mounting Banking Stress

 All data and figures in this article were collected from YCharts, Inc. on 03/20/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law. 

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

Stocks saw some relief from recent losses, as the S&P 500 posted a gain of nearly 2% last week alongside mixed economic data. The US dollar weakened as Eurozone inflation remains higher than US inflation, and markets now expect the ECB to continue its tightening cycle through the rest of 2023. This dollar weakness has led to strength in emerging market equities, which increased over 3% last week.

Economic Data

Pending home sales jumped 8.1% last month compared to economist expectations of 1% growth off the back of lower mortgage rates, and housing prices continued their monthly declines by declining 0.9% during December. Housing prices have now declined for six straight months on a month-over-month basis, which is one of the key reasons markets are hopeful that the worst of inflation is behind us.

Equities

After dropping nearly 5% during the month of February, the S&P 500 increased 1.97% last week to begin the month of March as economic data was largely mixed during the week. With interest rates as high as they are, there continues to be a discussion within the market of the current tradeoff between stocks and bonds. In fact, the earnings yield on the S&P 500 is now just over 5%, which is roughly the same as the six-month Treasury bill. One interpretation of this ratio is that markets are saying that stocks are relatively overvalued for their risk, while short-term bonds are relatively attractive for their risk.

Fixed Income

Interest rates initially rose to start the week, with the 10-year briefly going above 4% before moderating towards the end of the week. The six-month Treasury is now yielding 5.13%, which is the highest across the yield curve.

Commodities

Oil remains firmly in the $70-80 range at $78.61, but is now 34% lower than it was a year ago, which again should be good news for March’s inflation figure. Natural gas has also settled into a tight range, as warmer weather has significantly helped supply catch up to demand across the globe. The Freeport LNG export plant, which was closed in June 2022 after an explosion, has quietly reopened in the last few weeks allowing LNG exports to Europe to resume. This supply is crucial in helping Europe ween off of Russian natural gas, and the US has more than enough domestic production to meet demand so there is plenty of natural gas to export. Natural gas prices are down 73% from their peak in summer 2022.

Interesting Articles

• WSJ: Markets History 101: It’s Time to Buy Bonds
• CNBC: A rush of homes go under contract in January, but it’s unlikely to last
• Bloomberg: The Year That Redrew the Energy Map

All data and figures in this article were collected from YCharts, Inc. on 03/06/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it. 

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

Stock and bond continued their recent declines as inflation data continues to come in hotter than expected. The S&P 500 has now decreased 5% during the month of February as markets continue to be worried that inflation is not yet over. It has been an exhausting year, as this is seemingly the only thing that the stock and bond markets will care about going forward.

Economic Data

The Personal Consumption Expenditures Index, the Federal Reserve’s preferred inflation measure, was released last week and came in much hotter than expected. The core PCE was up 0.6% month-over-month, which was higher than the expectation of 0.4%. Headline PCE was also higher than expected at 0.6%, but was also much higher from December’s 0.2% growth.

Equities

The S&P 500 has now dropped nearly 5% in the month of February and lost 2.9% last week. Earnings season for the fourth quarter of 2022 has been mixed at best. While 68% of S&P 500 companies have beaten earnings expectations, earnings actually declined by 3.3% in the quarter. One interesting insight from these earnings calls has been their mention of the term “inflation.” According to FactSet, 325 companies mentioned the term “inflation” somewhere on their conference calls, which is the lowest number of mentions since Q3 2021. One example of this was on the Kraft Heinz earnings call, where the company did mention inflation in a positive light. The company stated that they raised prices 15.2% overall in 2022, but that they do not expect to increase prices at all in 2023 as the majority of their inflation headwinds have passed.

Fixed Income

Interest rates rose last week and the 2-year is now at its highest level since 2007 as markets begin to price in a small chance that the Federal Reserve will hike by 50 basis points at its next meeting. US retail sales for January were another positive for the economy, as sales increased by 3% in January for their largest monthly increase since March 2021. This provided yet another boost to interest rates as it appears the economy is showing no signs of slowing down.

Interesting Articles

• FactSet: Earnings Insight Q4 2022
• FT: US gas export plant hit by blast reopens with uncertain future
• WSJ: Stocks Rally Despite Squeeze on Profitability

All data and figures in this article were collected from YCharts, Inc. on 02/27/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

For the past 18 months, the market's focus has been on the release of CPI data, which has driven market movements week after week. This trend is likely to continue through 2023 as well. In January, the inflation rate was in line with expectations at 6.4%, but core CPI was higher than expected at 5.6% YoY. This was seen as bad news across the board, with stocks decreasing and interest rates shooting up to 2023 highs. The fear is that inflation might not be coming down as quickly as hoped, especially since this was preceded by a string of lower-than-expected inflation rates.

Economic Data

The CPI release for January was the most watched figure for the week. The data was relatively in-line with economists’ expectations, with some interesting data under the hood. Used car prices, one of the first indicators of high inflation in 2021, were down 11.6% from 2022. On the other side, the biggest factor in the stubbornly high inflation number continues to be shelter, which increased 7.9% from 2023 and was up 0.7% from last month. As we have repeatedly stated, this figure is on a known 12-month lag, so this should remain higher than the other inputs for a while as we wait for that input-lag to come out of the data.

Equities

The S&P 500 decreased 0.19% last week, but remain at YTD gains of 6.49% for 2023. European equities continued their march higher and have now outperformed US equities by nearly 4% this year. The European Commission stated last week that they now believe that Europe can avoid a recession in 2023 thanks to falling energy prices. There was significant worry in the European economy in 2022 that the Russia and Ukraine war would cause energy shortages across the bloc, but after a warm winter those fears never materialized and now natural gas prices are at a two-year low due to the decrease in expected demand.

Fixed Income

Interest rates continued their recent increases and are now at 2023 highs across the board following the inflation data. The Federal Reserve did not do much to calm bond markets down last week, as many Fed governors had harsh comments following the inflation data.  Cleveland Federal Reserve President Loretta Mester said there was a “compelling economic case” for another 50 basis point rate increase at the next meeting. The Fed hiked just 25 basis points at their February meeting, so a 50bp increase would be an unwelcome return to a very hawkish Fed. Markets are currently only placing a 21% probability on a 50bp increase, but it does appear that the Fed is considering the move following the jobs and inflation data from January.

Commodities

Oil and natural gas continue to remain at relatively low levels, as the supply disruptions and demand spikes from 2022 have significantly waned. Natural gas is currently at a 2-year low at $2.26.

Interesting Articles

• CNBC: CPI Release - January 2023
• FT: EU set to avoid recession following gas price fall, says Brussels
• WSJ: Inflation Is Falling, and Where It Lands Depends on Three Things

All data and figures in this article were collected from YCharts, Inc. on 02/20/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

Stock markets declined and interest rates rose last week after the January jobs report showed a shocking increase in job gains for the month. The moves last week looked eerily similar to those seen during most of 2022: interest rates up and stocks down as the fear of continued Federal Reserve rate increases became the sole focus. The jobs report was so strong that it overshadowed the recent data showing inflation could have moderated, and markets will be zeroed in on the inflation report this week to look for confirmation of that thesis.

Economic Data

The January jobs report was one of the biggest surprises in recent releases. The report showed that the economy added 517,000 jobs during the month while economists estimated the economy would add just 187,000. The increase in payrolls caused the unemployment rate to fall to 3.4%, its lowest rate since May 1969. Payroll gains have moderated over the past five months, hovering between about 250k-300k payrolls added per month. This exceptionally strong job growth was very unexpected and caused very large moves in interest rates.

Equities

The S&P 500 decreased 1.05% last week as stock markets focused on the hot jobs report from January and a disappointing earnings season for Q4 2022. About 70% of the companies in the S&P 500 have reported earnings so far, and about 70% of those companies have beaten earnings per share estimates. While on the surface this might appear positive, it is actually about average as far as upside earnings surprises go. What is more interesting is that companies that have surprised to the upside on EPS have only done so by about 1.1%, which is below the 5-year average of 8.6%. This means that while companies might be positive better than expected results, the magnitude is not nearly as high as usual.

Fixed Income

Interest rates have risen significantly over the past two weeks, resuming the trend higher after better than expected economic data. The Federal Reserve has already raised interest rates once this year, and now markets are pricing in at least a 25bp hike in February. The probability of that 25bp hike becoming 50bp will increase dramatically should inflation come in hotter than expected during this week’s report.

Commodities

Oil and natural gas continue to remain at relatively low levels, as the supply disruptions and demand spikes from 2022 have significantly waned. The most noteworthy story in commodity markets during the first quarter will be the dramatic price declines from Q1 2022. As you can see in the chart above, the price of oil one year ago was $95.46 per barrel. The current price of $79.69 is a 16.5% decline and would be a roughly 34% decrease from the highs of Q1 2022. This is a significant input into inflation and is a major part of the market expectation that inflation will continue to moderate this year.

Interesting Articles

• CNBC: January Jobs Report
• FactSet: Earnings Insight Q4 2022
• Ben Carlson: Where Have All the $200,000 Houses Gone?

All data and figures in this article were collected from YCharts, Inc. on 02/13/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market. 

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

Stock and bond markets resumed their 2023 rally last week, with the S&P 500 ending the week up nearly 2.5% due to strong economic growth and strong earnings. Q4 GDP was released and came in higher than expected, showing growth of 2.9%. Interest rates moderated from their highs in mid-2022 as markets continue to focus on the Federal Reserve. The Federal Reserve meets on February 1 and is expected to increase interest rates just 25 basis points, their slowest increase since the tightening cycle began last year.

Economic Data

The biggest story of the week was the better-than-expected GDP figure from Q4 2022, but there was another big release that flew under the radar: December Durable Goods. Durable goods orders measures the new orders placed with manufacturers for goods that are meant to last at least three years. New orders for December were expected to growth 2.5% month over month, but actually grew 5.6%. That is overwhelmingly good news and is yet another sign that the economy is growing at a healthy pace despite the inflation fears.

Equities

The S&P 500 increased nearly 2.5% last week as Q4 earnings season remains in full swing. The current earnings growth rate for the quarter shows an earnings contraction of 5%, but most companies are reporting better than expected results. So things are bad, but not as bad as they could be. The decline is primarily due to margin compression caused by rising costs.. Companies in the index increased prices during 2021 and 2022 and passed on a lot of that margin compression to consumers via high prices. Now those costs have outpaced companies’ belief that they can increase their prices, so their margins are compressed. The market does not appear to be overly concerned about this, as stocks are now up 6% in 2023.

Fixed Income

Interest rates were relatively calm last week as markets prepare for the Federal Reserve meeting this week. All eyes are on the future path of the Fed, and there are still significant fears that the Fed might have already tightened too much. This fear of over-tightening has pushed the 10 and 30-year rates down to below 4%. The long-end of the Treasury curve typically comes down during the tightening cycle when interest rate markets begin to believe a recession is on the horizon. The other possible scenario is a soft landing where inflation comes down significantly without a recession. In either the recession or soft landing scenarios, the long-end of the curve will be lower as either inflation or economic growth will be significantly lower later this year. If neither of these scenarios happen, it is possible that interest rates could resume their trend higher.

Commodities

Natural gas hit a two-year low of 2.67 last week as warmer weather across the world decreases overall demand for gas during what is normally a high use period. Natural gas prices are very weather dependent, and this decline is almost entirely due to warmer weather. Because of the Russia-Ukraine supply disruptions, Europe spent much of the fall filling their storage capacity as quickly as possible as the European Union was extremely fearful of a natural gas shortage if it was a harsh winter. Since weather across much of the world has been much warmer than average, that shortage never materialized, and Europe has had ample gas supply for the season. The increase in storage caused a decrease in demand, and at the same time demand was lower in the US due to the warmer weather. These patterns have pushed natural gas to levels not seen since Spring 2021.

Interesting Articles

• WSJ: Companies Cut Temp Workers in Warning Sign for Labor Market
• Nick Maggiulli: Are Declining Interest Rates Responsible for Stock Growth?
• Bloomberg: Debt Limit Fight Risks Early End to Fed QT

All data and figures in this article were collected from YCharts, Inc. on 01/27/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%. 

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market. 

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies. 

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

After a sharp rally to start the year, the stock market rolled over a little bit last week after economic news was much more negative than expected and bank earnings were weaker than expected. That negative economic data also caused yields to fall again, and the 10-year was all the way down to a five-month low of 3.38% on Wednesday. The Atlanta Fed’s GDPNow measure for the fourth quarter stayed high despite the negative data, and the real-time economic tracker now expects Q4 2022 GDP to show growth of 3.5%.

Economic Data

Both retail sales and the producer price index for December were released on Wednesday and were weaker than expected. December PPI showed prices falling by 0.5% in the month, compared to economist expectations of a 0.1% contraction. While many would have expected this to be a good sign for the stock market as it is yet another sign inflation is falling, it was coupled with poor retail sales data. Retail sales for December fell by 1.1% compared to economist expectations of a 0.8% decline. Stock and bond markets had begun pricing in the potential reality of a soft landing for the Federal Reserve, where growth stays steady but inflation comes down. However, the poor inflation and retail data began to spread some doubt that the soft landing is possible.

Equities

The S&P 500 had a volatile week, with losses of more than 1% to start the week and a gain of 1.86% on Friday. It finished the week lower by 0.27% but is still up 3.5% in 2023. Banks kicked off the earnings season last week, and markets were largely disappointed by their results. Goldman Sachs reported profits that were 66% below last years levels due to a steep decline in investment banking revenues, while Morgan Stanley, Citigroup, and Wells Fargo also reported lower than expected profits. The banks are overwhelmingly expecting a recession later this year, but it is important to keep that in perspective. When stock markets fall, investment banking revenues typically decline by a large amount. Couple that with a decline in home purchases due to the higher mortgage rates and higher housing prices of 2022, and it is no surprise that most banks saw declines in profit last year. United Airlines told a different story, as they have seen more demand than ever and continue to see strong consumer demand for travel during 2023, and their stock is reflecting that strength as the airline is up 33% year-to-date.

Fixed Income

Interest rates continue to be focused on the Federal Reserve and inflation, and the 10-year fell to a five-month low of 3.38% following the PPI release on Wednesday. The 2-year has also had big moves this year, as it has fallen more than 20 basis points to start the year to its current level of 4.22%. The big question in bond markets continues to be whether the Fed has already tightened too much or not. If they have, the fear is that the over-tightening will cause a recession later this year and therefore there is no need to continue increasing rates despite inflation over 6%. Bond markets now have placed a 99% probability on the Fed only increasing rates by 25 basis points in their February meeting, and there is beginning to be a discussion on whether they will increase rates at all in their March meeting.

Commodities

Commodities have been quiet lately, and oil remains lower than it was one year ago. As we get into the first quarter, oil’s inflation input should turn sharply negative, as the first quarter of 2022 contained the Russia and Ukraine war price shock to over $120 a barrel.  

Interesting Articles

• WSJ: China’s Shrinking Population is a Deeper Problem Than Slow Growth
• WSJ: Bonds Over Stocks: The New 60-40 Portfolio
• Bloomberg: Economists Says His Indicator That Predicted Eight US Recessions is Wrong This year

All data and figures in this article were collected from YCharts, Inc. on 01/20/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%.

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Producer Price Index (PPI) is  is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

Weekly Summary

The story for much of the past year has been the same: markets are concerned about the Federal Reserve, the economy, and inflation. Last week was no different, as Friday’s S&P 500 return of 2.29% pushed the index into positive territory to start the year. The December employment report and ISM Non-Manufacturing surveys were both released, and the stock and bond market both immediately traded on the announcement of that economic data. The December inflation report is released this week, and that will be another very important release for both stock and bond markets going forward. Inflation is expected to continue to slow down, with economists expecting the headline rate to come in at 6.5% year-over-year, down from 7.1% in November.

Economic Data

The December payroll report was supposed to be the highlight of the economic week, as it was released on Friday morning at 8:30am. It was a goldilocks report. Non-farm payrolls beat expectations and came in strong, and the unemployment rate ticked down to 3.5% alongside an increasing labor force participation rate. Those strong numbers also did not translate into higher-than-expected wage growth, which came in weaker than expected at 4.6% year-over-year. This means that the unemployment rate remained strong, but wages slowed down. That should be fantastic news for inflation going forward.

This data was upstaged at 10:00am by an often-overlooked report: the ISM Non-Manufacturing PMI survey. This is a measure of demand in the services sector of the economy, and any reading below 50 indicates a contraction. Economists expected the survey to show growth with a reading of 55, but instead the data showed a contraction at 49.6. While only a mild contraction, this softening of the data caused markets to rally as it immediately was interpreted as good news for inflation.

We will immediately be able to determine if that is true, as inflation is released this Thursday at 8:30am.

Equities

The S&P 500 started the year off strong, returning 1.48% last week off the back of a 2.29% gain on Friday following the economic data release. Stocks actually traded lower after the unemployment data came in relatively strong, but immediately rebounded at 10:00am following the surprisingly weak ISM Non-Manufacturing data. It appears as if the stock and bond markets are taking the “good news is bad news approach.” That means that when data comes out that is relatively strong, markets believe that this is a risk that inflation will stay hot and the Fed will be forced to keep rates higher for longer. If data is weak, markets believe inflation could be softer in the future and the Fed can ease off the gas on future rate hikes. This relationship has held true for the last few months as markets have been hyper-focused on the Federal Reserve and inflation.

Fixed Income

Similar to the S&P 500, fixed income had its entire start to the year determined by the economic releases on Friday. The 10-year spent most of the week hovering between 3.7% and 3.8% only to fall by about 15 basis points after the ISM release on Friday. The 10-year was actually up following the jobs report at 8:30am, but immediately fell at 10:00am when the ISM data was released. The 2-year showed an even more dramatic move, falling by over 20 basis points at one point to end the week at 4.27%. This significant drop in the 2-year interest rate shows that the markets were mostly looking towards the Federal Reserve’s future rate hike path following the economic data.

Commodities

The most interesting story in commodities the last few months has been in natural gas. For much of the past year, there has been significant worries in Europe about a potential natural gas shortage due to the Russian-Ukrainian war. Russia controls the majority of natural gas supply in the European Union, and therefore uses that gas as a political tool to implement its political desires in the bloc. However, this winter has been incredibly warm for much of the world and natural gas demand has been much lower than expected. That has caused the price of natural gas in the US to fall to $3.81/MMBtu from a high of $9.68 towards the end of last summer, a 61% decrease.

Interesting Articles

• WSJ: Hiring, Wage Gains Eased in December
• Byron Wien and Joe Zidle: The Ten Surprises of 2023
• Ben Carlson: You Now Have Options Galore for Yield on Your Savings

All data and figures in this article were collected from YCharts, Inc. on 01/06/2023 by Zach Hill of Blue Ridge Wealth Planners unless otherwise cited.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

Investments in emerging markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.

The performance figures shown are gross of investment advisory fees and other expenses. The deduction of these management fees and expenses would reduce the overall return. Because fees are deducted quarterly, the compounding effect would be to increase the impact of the fee deduction on gross account performance by a greater percentage than that of the annual fee charged.  For example, if an account is charged a 1% management fee per year and has gross performance of 12% during that same period, the compounding effect of the quarterly fee assessments will result in an actual return of approximately 10.9%. 

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law.

The FTSE Developed Europe Index is an index of European stocks, part of the FTSE Global Equity Index Series. It is a subset of the FTSE Europe Index. The FTSE Eurobloc Index is a subset of it.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The US Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.

West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies. 

The FAO Food Price Index (FFPI) is a measure of the monthly change in international prices of a basket of food commodities. It consists of the average of five commodity group price indices weighted by the average export shares of each of the groups over 2014-2016. The FFPI is calculated as the trade-weighted average of the prices of food commodities spanning the key agricultural markets for cereals, vegetable oils, sugar, meat and dairy products. While these commodities represent about 40 percent of gross agricultural food commodity trade (FAOSTAT), they are chosen for their high and strategic importance in global food security and trade.