Economy
- U.S. stocks recorded modest losses during the week ending November 18. Counterintuitively, investors had a negative reaction to upbeat economic news, which included stronger-than-expected retail sales and a drop in unemployment claims. Despite easing inflationary pressures, the favorable economic news suggested to investors that the Federal Reserve would not slow its pace of rate hikes. Still, concerns lingered that the Fed’s aggressive approach to rate hikes could prompt a recession.
- The Census Bureau reported that U.S. retail sales rose by 1.3% and 8.3% in October and over the previous 12-month period, respectively. The upturn spurred investors’ concerns that the data would dissuade the Federal Reserve from pivoting from its aggressive monetary policy tightening in the near-term. Sales for gasoline stations, food services, and non-store retailers saw double-digit year-over-year increases, while sales for electronics and appliance stores fell sharply over the same period.
- According to the U.S. Department of Labor, initial unemployment insurance claims decreased by 4,000 to 222,000 during the week ending November 12. The four-week moving average of initial claims increased by 2,000 to 221,000, but remained well below the 279,500 average for the same period a year earlier. The data indicates that the labor market remains tight, which could prompt the Fed to continue to raise short-term interest rates for a while longer in an effort to curb inflation. Meanwhile, the Fed’s index of industrial production, which measures activity in manufacturing, mining, and electric and gas utilities, dipped 0.1% in October, but was up 3.3% for the previous 12-month period. Additionally, the Fed revised the index’s gain in September downward from 0.4% to 0.1%. The slight decrease in industrial production in October was attributed to downturns in utilities and mining, which counterbalanced an increase in the production of business equipment.
- Meanwhile, the Fed’s index of industrial production, which measures activity in manufacturing, mining, and electric and gas utilities, dipped 0.1% in October, but was up 3.3% for the previous 12-month period. Additionally, the Fed revised the index’s gain in September downward from 0.4% to 0.1%. The slight decrease in industrial production in October was attributed to downturns in utilities and mining, which counterbalanced an increase in the production of business equipment.
Stocks
- U.S. equities were in negative territory. Consumer staples and health care were the top performers, while consumer discretionary and energy lagged. Value stocks led growth stocks and large caps beat small caps.
- Global equities closed lower for the week. Emerging markets fared better than developed markets.
Bonds
- The 10-year Treasury bond yield increased to 3.82% during the week.
- Global bond markets were in positive territory this week.
- Global corporate bonds led, followed by global government bonds and high yield bonds.
