Market Data as of Week Ending: 3/17/2023 unless noted otherwise

Equities

U.S. stock prices were mixed as investors were more focused on the fallout from SVB Financial and Signature Bank instead of the February CPI report. Contagion remains a concern among some investors as stock prices of Credit Suisse and First Republic have been under significant pressure and are in the process of receiving financial support from the banking industry. The trend of outperformance for the growth and size factors intensified as large cap growth stocks gained more than 4% and small cap value declined nearly 4% in a volatile week of trading. Performance dispersion was also wide across economic sectors with notable losses in the energy, financials, materials, and industrials sectors. Information technology, communication services, and consumer discretionary outperformed and were the best performing sectors. Developed foreign and emerging markets stocks were down for the week and lagged domestic equities.

Bonds

U.S. Treasury yields remained volatile as investor expectations have dramatically repriced how the Fed will handle interest rate policy for the rest of the year. The 2-year U.S. Treasury yield continued its descent early in the week and dropped below 4%, only a few days after rising above 5%. The 2-year rose back above 4% but ended the week at 3.81%, further illustrating investor concerns about the Fed’s ability to avoid a recession. The 10-year U.S. Treasury yield was less volatile and showed more signs of a trend lower, ending the week at 3.39%. Higher quality and longer duration bonds outperformed as the theme of risk aversion remained in force. High yield corporate bonds declined again and lagged across the curve. Yields for investment grade corporate bonds and high yield bonds ended the week at 5.3% and 9.0%, respectively.

Macroeconomic Data

Inflation data was supposed to be the highlight of the week, but those results were less of a focus given the banking situation. Results from the February CPI report were mixed, as year-over-year headline and core inflation declined to 6% and 5.5%, respectively. Monthly figures continue to show stubbornly high results that were up 0.4% and 0.5%, respectively, for headline and core inflation. Retail sales were lower than expected, coming in at a decline of 0.4% for the month and added to concerns that strong results in January were merely an outlier. Industrial production was flat for the month and slightly below expectations. In Europe, financial markets were rattled by the news that Credit Suisse was under duress and all eyes shifted to the ECB, given that they are fighting a similar fact pattern of stubbornly high inflation and resilient consumer behavior. The ECB increased their policy rate by 0.5% to 3.0%, intended to reduce inflation, but gave no forward guidance.

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Market Data as of Week Ending: 3/10/2023 unless noted otherwise

Equities

U.S. stock prices declined sharply as investors reacted to the Congressional testimony of Fed Chair Powell and concerns about the banking sector as the government took control of SVB Financial. Volatility picked back up as the S&P 500 nearly erased all the prior gains for the year thus far. Growth outperformed their value-oriented counterparts and large-sized companies outperformed their small and mid-sized peers. All major economic sectors were down with notable losses in the financials, materials, and real estate sectors. Traditionally defensive sectors such as utilities and consumer staples outperformed and were the best performing sectors. Developed foreign and emerging markets stocks were also down for the week but outperformed domestic equities

Bonds

U.S. Treasury yields were volatile as the 2-year U.S. Treasury yield rose above 5% and then fell by nearly half a percentage point to end the week at 4.60%. The flight to safety also hit the intermediate part of the curve as the U.S. Treasury yield fell sharply on Friday, ending the week at 3.70%. Higher quality and longer duration bonds outperformed as investors rotated out of risk assets. High yield corporate bonds suffered from the shift in risk sentiment and lagged across the curve. Yields for investment grade corporate bonds and high yield bonds ended the week at 5.4% and 8.9%, respectively.

Macroeconomic Data

Financial markets were focused on the testimony of Chair Powell along with the jobs report as the Fed enters the blackout period, where we will not hear from officials until the press conference on March 22nd. Economic data continued in a week that was packed full of incoming data. Job openings declined to 10.8 million and weekly jobless claims rose by more than 20,000 to end the period at 211,000. The official jobs report was mixed with a higher than expected 311,000 increase in non-farm payrolls and hourly earnings that rose 0.2% for the month, slightly lower than expected. However, the unemployment rate surprised investors by rising from the fivedecade low of 3.4% to 3.6%. In Europe, economic data was also mixed as consumer demand slowed but industrial production strengthened.

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Market Data as of Week Ending: 3/3/2023 unless noted otherwise

Equities

U.S. stock prices advanced after closing out the month of February with losses. The S&P 500 declined 2.44% for the prior month as investors grappled with mixed economic signals and stubborn inflation. Quarterly reports from companies in the S&P 500 were generally worse than expected as aggregate earnings growth declined nearly -5% in the fourth quarter. Analysts are expecting earnings to decline nearly 6% in the first quarter; however, they are still forecasting 2023 revenue and earnings to grow by 2%. For the prior week, growth stocks rotated back into favor and outperformed their value-oriented counterparts, while the size factor was mostly irrelevant. Nine of the eleven economic sectors were positive with materials and industrials being the prominent leaders. Utilities and consumer staples were the only two sectors with losses as defensive sectors lagged. Developed foreign and emerging markets stocks were positive for the week but underperformed domestic equities.

Bonds

U.S. Treasury yields were mixed as the 10-year U.S. Treasury yield rose above 4% for the first time since October but came back in and ended the week at 3.97%. The bond market has been repricing an extension of elevated rates by the Fed as economic data shows a resilient consumer with continued strength in the labor market. Long duration bonds delivered solid gains as long government and investment grade corporate bonds were the best performing segments. High yield corporate bonds also benefited from the favorable risk sentiment and delivered gains across the curve. Yields for investment grade corporate bonds and high yield bonds ended the week at 5.5% and 8.6%, respectively.

Macroeconomic Data

The trend of mixed economic data continued in a week that was packed full of incoming data. Durable goods illustrate how challenging the picture is right now as durable goods, excluding aircraft, were up 0.7%; however, overall durable goods orders were down -4.5%, the worst reading since April 2020. Survey data from ISM edged higher, but still shows continued contraction for the manufacturing sector with a PMI reading of 47.7. The services sector looks to be in much better shape as ISM reported a PMI figure that was ahead of expectations at 55.1. According to S&P Global, the US Composite PMI Index rose above 50 in February, following seven months of contraction. The housing market has been a consistent source of bad news as higher rates have stalled demand for home ownership. However, pending home sales were up 8.1% in January, marking the second month of gains. In Europe, headline inflation eased to 8.5%, but they are struggling to reduce core inflation that ticked up to 5.6% with an unemployment rate that is near record lows for the region.

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Market Data as of Week Ending: 2/24/2023 unless noted otherwise

Equities

U.S. stock prices ended the week lower as the S&P 500 recorded its worst weekly loss since early December, falling -2.66%, as investors are concerned that inflation may have reversed course and ongoing rate hikes from the Fed appear more likely. With the fourth quarter earnings season nearing the home stretch, 66% of S&P 500 companies have topped revenue estimates, and approximately 68% have exceeded earnings projections, both below their 5-year average. Value stocks generally outperformed their growth-oriented counterparts, while small and mid-sized companies underperformed their large-cap peers. Ten of the eleven economic sectors were negative, with consumer discretionary and communication services being the prominent laggards. The energy sector was the best performing sector, being the only one to notch a positive week as oil rebounded slightly. Developed foreign and emerging markets stocks were negative for the week but were mixed versus domestic equities.

Bonds

U.S. Treasury yields increased solidly over the week as the hotter-than-expected inflation print and course of further interest-rate hikes were priced into the market. The 10-year U.S. Treasury yields ended the week at 3.95%, its highest level since November of 2022. The 2-year U.S. Treasury yield also increased, climbing to 4.78%. Returns were negative across the quality and duration spectrum as short and intermediate duration high yield bonds were the best performing segments. Yields increased for investment grade corporate bonds and high yield bonds, ending the week above 5.5% and 8.7%, respectively.

Macroeconomic Data

Economic data was generally mixed for the week. Flash S&P 500 manufacturing and services PMI readings showed improvement as both indices edged higher. U.S. existing home sales fell 0.7% to a seasonally adjusted rate of 4 million in January, marking the 12th straight monthly decline. The U.S. GDP was revised lower from 2.9% to 2.7% for the fourth quarter as consumer spending grew at 1.4% rather than the 2.1% that was originally reported. Consumer spending rose 1.8% in January, its largest increase in three months, as Americans spent more on prescription drugs and at restaurants. The U.S. savings rate rose to 4.7% from 4.5%, continuing its upward trend despite personal incomes only rising 0.6%. U.S. inflation jumped again as PCE rose by 0.6% in January, its largest increase since last summer. Consumer sentiment rose to a 13-month high of 67 in February, suggesting a higher degree of optimism about the economy among U.S. households. The U.K. and Germany both saw consumer confidence rebound from recent lows, with the U.K. recording its biggest improvement in nearly two years.

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Market Data as of Week Ending: 2/17/2023 unless noted otherwise

Equities

U.S. stock prices ended the week mixed as investors weighed healthy growth signals against cloudy monetary policy and inflation outlooks. Fourth quarter earnings season continues to produce subpar results with earnings expected to decline 4.7% compared with the same quarter a year ago. Value stocks underperformed their growth-oriented counterparts while small and mid-sized companies generally outperformed their large-cap peers. Returns across the eleven economic sectors were mixed with consumer discretionary and utilities being the best-performing sectors. The energy sector was the prominent laggard as a strengthening dollar and weak U.S. manufacturing data weighed on oil prices. Developed foreign and emerging markets stocks were mixed for the week as both lagged domestic equities.

Bonds

U.S. Treasury yields increased solidly over the week as stronger-than-expected January retail sales deepened inflationary concerns and seemed to validate Fed official’s recent comments that there is more work to do to tame inflation. The 1-year U.S. Treasury yield crossed 5% for the first time since 2007 with the 2-year and 10- year U.S. Treasury yields ending the week at 4.60% and 3.82%, respectively. Returns were negative across the quality and duration spectrum as short-duration government bonds was the best-performing segment once again. Yields increased for investment-grade corporate bonds and high-yield bonds, ending the week above 5.3% and 8.6%, respectively.

Macroeconomic Data

Economic data was generally mixed as a hotter-than-expected CPI report kicked off the week. The cost of living rose 0.5% in January, the biggest increase in three months, as higher housing costs and gasoline prices accounted for most of the increase. The NFIB small-business index rose to 90.3 in January as inflation pressures moderated slightly. U.S. retail sales increased 3% in January, the biggest rise in almost two years, as sales rose in every single major category. The Empire State manufacturing index rose to -5.8, a rebound of 27.1 points, but still marked the third month in a row of declining activity. U.S. wholesale prices rose 0.7% in January, which was above estimates and marked the biggest gain since June. The Philly Fed manufacturing index fell to -24.3 in February, its lowest level since May 2020. The U.S. leading economic index fell 0.3% in January, marking the tenth straight monthly decline. U.K. inflation fell for the third consecutive month to 10.1% in January, stoking hopes that the BoE may opt for a smaller interest rate hike in March.

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Market Data as of Week Ending: 2/10/2023 unless noted otherwise

Equities

U.S. stock prices ended the week lower, snapping a two-week winning streak as investors digested Fed commentary, mixed corporate earnings and resilient economic data. With fourth-quarter earnings season wrapping up, analysts have been cutting their first-quarter earnings-per-share forecasts by an average of 3.3% for companies in the S&P 500, worse than the average January reduction of 1.5%. Value stocks outperformed their growth-oriented counterparts while large-cap companies generally outperformed their small and mid-sized peers. Ten of the eleven economic sectors were lower with communication services being the prominent laggard. Energy was the best performing sector as oil prices surged last week on concerns that the earthquakes in Turkey and Syria materially damaged oil infrastructure in the region. Developed foreign and emerging markets stocks ended the week lower and both lagged domestic equities.

Bonds

U.S. Treasury yields increased solidly over the week as the inversion of the yield curve grew to its widest margin since the early 1980s as fears rose that the Fed will need to push the economy into a recession to tame inflation. The 10-year U.S. Treasury yield climbed to 3.74% while the 2-year yield hit a two-month high of 4.50%. Returns were negative across the quality and duration spectrum as short duration government bonds were the best performing segment. Yields increased for investment grade corporate bonds and high yield bonds, ending the week above 5.2% and 8.4%, respectively.

Macroeconomic Data

Economic data was generally better than expected as Fedspeak dominated the relatively light week. U.S. consumer credit grew by 2.9% in December, the slowest pace in two years as rising interest rates cause households to cut back on borrowing. U.S. wholesale inventories grew at a reduced pace in December, rising only 0.1%, as wholesalers scaled back their restocking efforts amidst weakened demand. Initial jobless claims were slightly higher than expected, coming in at 196,000 for the week ending February 4th. The preliminary consumer sentiment index rose to a 13-month high of 66.4 in early February as Americans grow more optimistic about the U.S. economy. As a surprise to many, the Bank of Japan (BoJ) appointed Kazuo Ueda as the central bank’s next governor. Ueda, an economist and former member of the BoJ Board, had not been mentioned as a shortlisted candidate.

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Market Data as of Week Ending: 2/3/2023 unless noted otherwise

Equities

U.S. stock prices continued their rally last week as investors were able to glean some dovish remarks from the Federal Reserve as Fed Chair Jerome Powell acknowledged disinflationary signs for the first time. The estimated earnings decline for the fourth quarter has continued to worsen, expanding to -5.3% from -5.1% last week as negative earnings surprises from companies in the communication services, information technology, and consumer discretionary sectors have contributed to the downward revisions. Growth stocks once again outperformed their value-oriented counterparts while small and mid-sized companies generally outperformed their larger peers. Nine of the economic sectors delivered gains with notable strength in the consumer discretionary, information technology, and communication services sectors. Energy was the worst-performing sector along with traditionally defensive sectors which lagged with declines in the healthcare and utilities sectors. Developed foreign and emerging markets stocks ended the week with mixed results and lagged domestic equities.

Bonds

U.S. Treasury yields had a volatile week as the Fed’s rate hike sent yields lower mid-week before strong labor reports ultimately sent yields higher. The 10-year ended the week at 3.60% while the 2-year rose to 4.76%. Returns were generally positive across the quality and duration spectrum as long-duration high yield bonds were the best-performing segment. Yields came down slightly for investment grade corporate bonds and some spread tightening for high yield bonds, ending the week just below 5.0% and 8.0%, respectively.

Macroeconomic Data

Economic data came in mixed with better-than-expected employment data showing signs of persistent strength in the labor market despite the economy showing signs of fraying. The consumer confidence index fell to 107.1 in January, reflecting growing concerns about a potential recession. The ISM manufacturing index dropped to 47.4% from 48.4%, contracting for the third month in a row. U.S. factory orders rose 1.8% in December on strong civilian aircraft demand but were below estimates. The U.S. added 517,000 new jobs in January, the largest gain in six months and significantly stronger than the 187,000 forecasted. The U.S. unemployment rate fell to a 54-year low of 3.4%. The BoE and ECB each raised their key interest rates by 0.50% last week – while the ECB anticipates another 0.50% rate hike, the BoE hinted that rates may have peaked as they said a UK recession was likely to be “much shallower” than forecast in November.

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Market Data as of Week Ending: 1/27/2023 unless noted otherwise

Equities

U.S. stock prices moved higher as investor sentiment has improved, despite a weaker outlook for the business cycle. The estimated earnings decline for the fourth quarter has expanded to -5.0% and most of the companies that provide guidance have projected lower estimates for the first quarter. Growth stocks once again outperformed their value-oriented counterparts, while the size factor was more mixed, but large-sized companies generally outperformed small and mid-sized peers. Nine of the economic sectors delivered gains with notable strength in the consumer discretionary, information technology, and communication services sectors. Traditionally defensive sectors lagged with declines in the healthcare and consumer staples sectors. Developed foreign and emerging markets stocks ended the week with gains for the fourth consecutive week; however, relative performance in both markets lagged domestic equities.

Bonds

U.S. Treasury yields were mixed as yields edged higher for short to intermediate term bonds and the 10-year ended the week at 3.52%. New economic data did not change investor expectations, which remain confident that the Fed will slow the pace of interest rate increases to 0.25%, at the upcoming meeting. Returns were mixed across the quality and duration spectrum as long duration corporate bonds were the best performing segment. Yields were largely unchanged for investment grade corporate bonds and some spread tightening was observed for high yield bonds, ending the week at 5.0% and nearly 8.2%, respectively.

Macroeconomic Data

Economic data came in mixed with better-than-expected inflation data showing signs of deceleration and solid economic growth, despite recent declines in consumer spending and a weak outlook according to survey data. The PCE index showed that headline inflation slowed to 5.0% and the core measure (excluding food and energy prices) dropped to 4.4%, its lowest increase since October 2021. Economic growth, as measured by GDP, increased 2.9% in the fourth quarter and 2.1% for the calendar year 2022. The bad news was that consumer spending fell in December for the second consecutive month, despite lower prices. According to S&P Global, the outlook for economic growth has improved, but the flash composite PMI is still pointing toward a contraction with a 46.6 reading. The outlook in Europe is starting to improve as business confidence increased and the flash composite PMI improved to 50.2, showing signs of optimism for the first time since June of last year.

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