Global Equities Snap Losing Streak
Global equities rose to break the three-week losing streak. Global markets (represented by the MSCI All Country World Index) were up 2.66%, and domestic stocks (represented by the S&P 500 Index) were up 3.68% on the shortened week.
The US 10 Year Treasury yield has continued to rise for the sixth straight week as it reached 3.32% on Friday as the market expects further rate hikes. The yield started in 2022 at around 1.50% and was at 2.60% at the beginning of August.
European Central Bank
The European Central Bank increased interest rates by 0.75% as they attempt to fight inflation. The rate hike was the largest in the central bank’s history and lifted their deposit rate to 0.75% from 0.00%. Eurozone inflation was recently reported at a 9.1% annual rate.
US Crude Oil fell to its lowest level in 8 months around $82 last week. At the end of August, oil prices were as high as $97.
All eyes are looking ahead to this week’s Consumer Price Index report for more insight into moderating inflation through August. July’s reading dropped to an annual rate of 8.5% from June’s reading of over 9%. While the market is pricing in a 0.75% rate hike by the Fed this month, slowing inflationary data could change the expectation of future rate hikes.
I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
S&P 500: The Standard & Poor’s 500 Composite Stock Price Index is a capitalization-weighted index of 500 stocks intended to be a representative sample of leading companies in leading industries within the U.S. economy. Stocks in the Index are chosen for market size, liquidity, and industry group representation.
Russell 2000: The Russell 2000® Index is a capitalization-weighted index designed to measure the performance of the 2,000 smallest publicly traded U.S. companies based on in market capitalization. The Index is a subset of the larger Russell 3000® Index.
MSCI All Country World Index: The MSCI ACWI captures large and mid-cap representation across 23 Developed Markets (DM) and 24 Emerging Markets
(EM) countries. With 2,937 constituents, the index covers approximately 85% of the global investable equity opportunity set.
GDP: Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
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