Weekly Market Commentary November 6th to November 10th 2023

In one of the lightest weeks of economic data in recent memory, the big news to report is Fed Chair Powell’s remarks at the International Monetary Fund’s Washington DC conference. Powell suggested, as he has several times, that the Fed may not be finished raising short-term interest rates in order to combat inflation. There is one more meeting of Fed governors prior to year’s end and the current odds of another rate hike stands at around 10%. Powell clearly is walking a fine line with his rhetoric as he knows what a delicate job he has ahead of him, balancing the risks of inflation with the risk of inducing a recession. He has inflation on the run (falling, that is) but the lower it goes, the more stubborn it seems to be. Does he side with the hawks and boost rates one more time, expecting doing so could be the nudge the economy needs to get inflation to that 2% target? Or does he stand pat and stand with doves who say let the current rate environment play out, as pushing rates even higher may drive the economy into contractionary territory? His frequent speeches are some of the most scrutinized in economics these days, as reporters and economists try and pin down exactly what he has up his sleeve. Simple word deviations from the prior week can swing markets. Other Fed governors speak on a regular basis too, but no one holds the room quite like Chair Powell. Stay tuned!

In economic data this week, Weekly Initial Jobless Claims came in at 217k, in the middle of the predicted range and slightly higher than the four-week moving average. As mentioned here before, Jobless Claims is a good leading indicator for company layoffs, and likewise, a slowing economy. Lastly, the University of Michigan’s Consumer Sentiment Index fell more than expected for November, perhaps showing consumer concern despite recent strong spending numbers.

In the financial markets, equities were all up on the week. The S&P500 was up 0.9% to 4415; the Dow Jones Industrials climbed to 34,283; and the NASDAQ finished the week 2.4% in the black at 13,798. In fixed income, results were also mixed. The 2-Year U.S. Treasury climbed to 5.05%; the bellwether 10-Year was up slightly to 4.62; and the 30-Year was basically flat at 4.74%.

Back to normal next week with economic data that will include the all-important Consumer and Producer Price Indices for October, Retail Sales, Industrial Production and Capacity Utilization, and Housing Starts.