Economic Update 9-11-2023
- On a shortened holiday week, economic data was positive, which included ISM services sentiment coming in stronger than expected, and jobless claims falling a bit.
- Global equities fell back as interest rates rose in conjunction with the still-decent U.S. economic data. Bonds fell in line with slightly higher yields, and a stronger U.S. dollar held back foreign debt markets. Commodities were mixed, with weaker metals offset by a continued rise in the price of crude oil.
U.S. stocks fell back in the shortened holiday week as decent economic data (stronger ISM services and lower jobless claims) resulted in a creep higher for interest rates. However, later in the week, some Fed comments were taken dovishly, that policy rate hikes may be finished. By sector, conditions were mixed, with gains in energy coming along with higher petroleum prices, as well as defensive utilities. By contrast, industrials, materials, and technology all experienced declines of several percent each. In particular, large index component Apple was hampered by the news of Chinese government employees to be restricted from using iPhones, as well as uncertainty over the potential popularity of the new iPhone models assumed to be rolled out next week. Real estate also fell back by a percent, in keeping with higher interest rates.
Foreign stocks lost ground last week as well, to a similar magnitude to U.S. markets. Japan and the U.K. fared slightly better than Europe, with the latter still plagued by expectations for higher interest rates, estimates for growth coming down, and continued weak industrial numbers—particularly in Germany. Conversely, Japanese GDP rose at a 4.8% annualized pace in Q2, although that was weaker than expected. As it stands, the region has been bordering on recession. Emerging markets suffered the deeper decline, as continued weakness in China pulled down the broader index, notably in services and exports.
Bonds declined a bit last week as interest rates ticked about 0.05-0.10% across the Treasury yield curve. The worst performer was high yield, in line with weaker equity returns, while floating rate bank loans earned a small gain. Foreign bonds ended in the negative, due to a rise in the U.S. dollar of nearly a percent.
Commodities were mixed, with gains in energy were offset by declines in industrial and precious metals. Crude oil rose over 2% last week to $87/barrel, as inventories continue to be drawn down and production kept low. From lows in mid-June, spot crude prices are up 30% due to these factors.
|
Period ending 9/8/2023 |
1 Week % |
YTD % |
|
DJIA |
-0.70 |
5.99 |
|
S&P 500 |
-1.26 |
17.45 |
|
NASDAQ |
-1.92 |
32.27 |
|
Russell 2000 |
-3.58 |
6.22 |
|
MSCI-EAFE |
-1.38 |
9.08 |
|
MSCI-EM |
-1.17 |
3.90 |
|
Bloomberg U.S. Aggregate |
-0.30 |
0.59 |
|
U.S. Treasury Yields |
3 Mo. |
2 Yr. |
5 Yr. |
10 Yr. |
30 Yr. |
|
12/31/2022 |
4.42 |
4.41 |
3.99 |
3.88 |
3.97 |
|
9/1/2023 |
5.53 |
4.87 |
4.29 |
4.18 |
4.29 |
|
9/8/2023 |
5.55 |
4.98 |
4.39 |
4.26 |
4.33 |
Sources: LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research. Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends. Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.