Weekly Market Recap – September 22, 2023
The S&P 500 and NASDAQ experienced weekly declines of approximately 3% to 4%, marking their third consecutive week in the red. These setbacks were primarily triggered by significant declines on Wednesday afternoon and Thursday following the latest Fed meeting.
Although the U.S.’s central bank kept its benchmark interest rate unchanged, as widely anticipated, it provided signals that it intends to maintain this elevated rate for a more extended period into 2024 compared to its previous forecasts. Projections unveiled after the Fed meeting revealed that 12 out of 19 officials favored raising interest rates again this year.
Yields on U.S. government bonds slightly pulled back on Friday, having surged to their highest levels in over a decade on Thursday. The 2-year U.S. Treasury bond yield reached as high as 5.20% during intraday trading, the 10-year yield peaked at 4.49%, and the 30-year yield rose to 4.59%.
A key index monitoring investors’ expectations of short-term U.S. equity market volatility increased by nearly 25% over the week, reversing a recent decline that had pushed the index to its lowest point since late 2019. Nevertheless, the Cboe Volatility Index (VIX) stood at approximately 17.2, which was below its year-end 2022 level of 21.7.
Japan’s central bank opted to maintain its primary interest rate targets unchanged. Kazuo Ueda, the bank’s governor, cited concerns about deflationary risks if monetary policy were tightened prematurely. This decision came as Ueda expressed his intention to keep a benchmark short-term interest rate in negative territory, a stance that has been in place since 2016.
In contrast, the Bank of England, which had been consistently raising its benchmark interest rate since December 2021 to combat inflation, decided to keep its rate steady after inflation dipped to an annual rate of 6.7% in August. This marked a departure from the previous 14 meetings in which rates were increased.
Japan’s yen has significantly depreciated relative to the U.S. dollar this year, driven by Japan’s accommodative monetary policies and the United States’ higher interest rates. As of Friday, the yen had depreciated by approximately 12% year-to-date, as the interest rate gap between Japan and the United States widened to its highest level in 22 years.
A forthcoming report scheduled for release on Friday will reveal whether the recent pause in the long-term decline of inflation persisted into August. This will be measured by the U.S. Federal Reserve’s preferred gauge for tracking prices. The most recent report indicated that the Personal Consumption Expenditures Price Index rose at an annual rate of 3.3% in July, up from 3.0% in June, signifying a reversal of the downward trend observed in previous months.
Major U.S. Economic Reports
|Home builder confidence index||Sep||45||50|
|Housing starts||Aug||1.28 million||1.45 million|
|Building permits||Aug||1.54 million||1.44 million|
|Initial jobless claims||Sep 16||201,000||221,000|
|Philadelphia Fed manufacturing survey||Sep||-13.5||12|
|U.S. current account deficit||Q2||-$212.1B||-$214.5B|
|U.S. leading economic indicators||Aug||-0.4%||-0.4%|
|Existing home sales||Aug||4.04 million||4.07 million|
|S&P flash U.S. services PMI||Sep||50.2||50.5|
|S&P flash U.S. manufacturing PMI||Sep||48.9||47.9|
Closing Prices for the Week
|Dow Jones Industrials Average||33,963.84|
|S&P 500 Index||4,320.06|
|CBOE Volatility Index||17.20|
|U.S. Dollar Index||105.583|
|10-Year T-Note (Dec ’23)||108-220|
|Crude Oil WTI (Nov ’23)||90.03|
|Natural Gas (Nov ’23)||2.879|
|Gold (Dec ’23)||1,945.6|
|Silver (Dec ’23)||23.844|
|Corn (Dec ’23)||477-2|
|Wheat (Dec ’23)||579-4|
|Soybean (Nov ’23)||1296-2|
|Coffee (Dec ’23)||151.15|
|Sugar #11 (Mar ’24)||22.08|
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