Economy
- U.S. equity markets moved higher on Friday and finished the week ending October 21 in positive territory as investors scrutinized third-quarter corporate earnings reports. The stock market recovered from a downturn on Thursday attributable to political uncertainty in the UK. Short-tenured Prime Minister, Liz Truss, resigned amid strong opposition within her own Conservative Party to her aggressive tax-cut proposal, which pushed UK bond yields sharply higher and led to the British pound sinking to a 37-year low against the U.S. dollar.
- Corporate earnings news was generally mixed early in the third-quarter reporting season. While there have been numerous positive earnings surprises, several large banks increased their loan loss provisions, which weighed on earnings growth. Additionally, the results of U.S. companies with significant earnings from overseas operations have been hampered by foreign exchange effects due to the continued strength of the U.S. dollar versus most major global currencies.
- The Department of Labor reported that there were 214,000 initial unemployment claims filed during the week ending October 15—down 12,000 from the previous week’s revised total of 226,000. The numbers indicate that there haven’t been widespread layoffs and the labor market remains relatively tight. This could further pressure employers to increase wages in the current inflationary environment. The four-week moving average of initial unemployment claims rose by 1,250 to 212,250 last week, but was sharply lower than the 335,750 average for the same period in 2021.
Stocks
- U.S. equities were in positive territory. Energy and information technology were the top performers, while utilities and consumer staples lagged. Growth stocks led value stocks and large caps beat small caps.
- Global equities closed higher for the week. Developed markets fared better than emerging markets.
Bonds
- The 10-year Treasury bond yield increased to 4.22% during the week.
- Global bond markets were in negative territory this week.
- High yield bonds led, followed by global corporate bonds and global government bonds.
