The Weekly Wrap: November 21, 2022

Week in Review

The Dow Jones Industrial Average was unchanged on the week, but tech-related indexes fell, with the Nasdaq Composite down 1.6%. The Nasdaq has been the laggard all year, and it’s still down nearly 29% for the year. Treasuries were flat after a substantial drop in yields the previous week. The biggest moves were in commodities, where crude oil fell 10% for its worst weekly performance since April. Gold prices fell 1.1%, giving back some of the prior week’s huge gains, and Bitcoin continued to drop as the FTX meltdown continues to weigh on cryptocurrency confidence. The US Dollar index rose 0.6%

The views of St. Louis Federal Reserve Bank President James Bullard have been prescient during this tightening cycle. He was the first to begin talking about interest rate hikes back in 2021, when most of the FOMC still believed inflation was transitory and rates would remain at zero until 2024. Last week, Bullard raised his forecast of the terminal Fed Funds rate to above 5%. That doesn’t preclude a slowdown in hikes, as Vice Chair Lael Brainard views a 0.5% bump at the December meeting as increasingly likely.

Monitoring Macroeconomics

GDP rebounded in the third quarter of 2022 after two consecutive quarters of negative growth to start the year. That should help dispel fears of an ongoing recession, especially since one was never confirmed by the National Bureau of Economic Research.

Measures of inflation remain well above the Federal Reserve’s 2% target, but CPI decelerated in the most recent month. Unemployment remains historically low at 3.7%, and consumer spending, measured by retail sales, remains robust.

What’s Ahead

It’s a shortened week of trading with markets closed on Thursday and Friday’s session shortened in observance of the Thanksgiving holiday. The schedule change means that a full week of data is piled into a single day. We’ll get durable goods orders, PMI survey results from S&P Global, new home sales, University of Michigan Consumer Sentiment, and minutes from the latest FOMC meeting on Wednesday. Weekly jobless claims, which are normally reported on Thursday, have also been moved to Wednesday.

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