The Week in Review 11/07/22
“Someday computers will make us all obsolete.”
–Bobby Fischer
Good Morning,
Last week was another week of watching the Fed and hanging on every word they said to try to discover in their innuendo what the future might hold. And frankly for the markets it is becoming exhausting.
As we expected, the Fed raised rates .75%, which is the fourth .75% hike in a row, and the 6th hike this year… we have one of the most aggressive Feds we have ever seen in history.
Interest rates are now the highest they have been since 2008.
Fed Funds have gone from virtually zero to 3.75% - 4.25% in less than a year?
Mortgage rates have gone from below 3% to over 7%?
Source: Bankrate
We are seeing the housing market, and especially new home sales, hit the brakes rather dramatically.
What the markets were hoping for was Fedspeak to become more “dovish”, when referring to future policy, and we got very little of that. Instead we were almost guaranteed yet another rate hike in December.
The only positive taken out of Chairman Powell’s speech was that the size of future hikes could be less? A small concession indeed, but a concession.
Stocks fell and rates rose… until an attempt to “circle the wagons” gave us a very nice gain on Friday of 400+ Dow points. At the end of the week it was too little and too late to allow the week to produce a gain.
Market Snapshot…
- Oil Prices – Oil prices rose last Friday amid uncertainty around future interest rate hikes. West Texas Intermediate crude was up $4.39 or 4.98% at $92.56/barrel, while Brent crude was up $4.40, or 4.99%, at $98.61/barrel.
- Gold – Gold prices surged 3%. Spot gold rose nearly 3.19% to $1,684.90 per ounce, while U.S. gold futures were up 3.3% to $1,684.70 per ounce. Silver finished the week at $20.784.
- U.S. Dollar – The dollar index slumped on Friday for a weekly decline of around 1.93% and closed at 110.75. Euro/US$ exchange rate is currently 1.002.
- U.S. Treasury Rates – The 10-year Treasury yield traded about 5 basis points higher after rising earlier to 4.171%.
- Asian shares were higher in overnight trading.
- European Markets are trading mixed.
- Domestic markets are also trading mixed this morning.
Looking ahead…
These aggressive rate hikes are bound to start showing up in slowing CPI & PPI, and when/if we see these ease, the Fed will hopefully move to the “pivot” the markets so very much want.
Have a great week!!
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