Economic Market Summary

Market Down and Dirty

Last Week’s Economic/Market Summary


  •  U.S. equity indices bounced back last week to finish higher.

    • S&P 500 +2.59% Dow +3.33%, Russell 2000 +3.71%, Nasdaq +3.45%1

      • The All-Country World Index moved higher by 3.11%.1 

    • S&P 500 sub-sectors were all mostly higher last week.

      • Consumer Discretionary, Industrials, & Materials led to the upside. 

      • Healthcare & Utilities were the only negative sectors. 

    • The CBOE Volatility Index (VIX) declined 5% to end around 23. 1 

  • US Treasury bond yields moved lower last week across the maturity curve.

    • US 2yr -0.14% at 2.97%, 10yr -0.15% to 2.78%, 30yr -0.10% to 2.99%.1 

    • The yield curve flattened as the 2yr/10yr yields remained inverted. 

  • Commodities as an aggregate asset class were little changed last week.

    • WTI Crude declined 3%.1 

    • Gold rose slightly. 1 

    • The US Dollar index lost 1%.1 

  • In our opinion, U.S. economic data was mixed last week.

    • Global Flash Purchase Manager Indices showed softening business conditions. 1 

    • Data tracking the US Services sector contracted for the first time in 2+ years. 1 

    • Measures of the housing market continued to weaken. 1 

  • An index of equities outside the US (FTSE All-World ex-US) gained over 3%.1 


  • Equity markets broke out of their recent trading range to the upside last week despite recession fears that continue to percolate.
    • The tech-heavy Nasdaq & small-cap tracking Russell 2000 led domestic markets to the upside with gains over 3%.1 
  • Since the lows on June 16th, the markets have now rallied 8%, yet we encourage caution.
    • Over the last 50 years, there have been 5 major and sustained bear markets which saw 40 episodes in total of 5%+ rallies from the 1-month lows. 1
      • They lasted on average 3 weeks and delivered a fast and furious 7-8% return. 1 
      • The recent run higher would be considered average in return and above average in time. 
    • While the rally could go a bit further, we believe its upside is limited by both the Fed’s willingness to keep real rates into restrictive territory and the already contained equity upside that’s being constrained by weakening economic conditions. 
  • S&P 500 subsectors were mostly higher last week.
    • Year-to-Date performance laggards led to the upside as Consumer Discretionary, Materials, & Industrials caught a bid. 
    • Economically non-cyclicals Utilities & Healthcare were the only negative sectors. 
  • US government interest rates moved lower last week as the yield curve flattened notably.
    • A key gauge of investors forward inflation expectations dropped last week to its lowest levels since early 2021. 1
      • This seems to have had an impact on bringing rates lower, especially on the long end. 
    • A big part of the inflation picture is increasing concern that the tightening the Fed is currently embarked upon might spark a economic slump, which tends to have a disinflationary impact. 
    • The Fed meets this week and all expectations are for another 0.75% rate hike.
      • We remind readers that a major risk for the Fed is in not hiking enough vs going too far. 
      • They can easily pivot dovish if they go too far, but if they don’t hike enough, sustained higher inflation could persist and this is the bigger economic risk. 
    • In our opinion, the Federal Reserve will probably have to inflict much more pain on the economy to get inflation truly under control. 
  • International equities rose last week as the US Dollar provided some breathing room at a time when non- US major economies face numerous headwinds. 1
    • The European Central Bank hiked interest rates more than expected last week in an effort to contain inflation in the Eurozone. 1
      • This happened as the Italian gov’t led by ex-ECB president Draghi collapsed and he resigned. 1 
    • In China, increasing debt pressures centered around their housing market continue to grow.
      • This situation in the mainland could further boost the chances of a stimulus program from the Chinese Communist Party at a time when other major developed world central banks are tightening policy. 

Ryan A. Mumy, CFP®,
AIF® – Chief Investment Officer

Contact: 828/855-9400 or 

 1 Source: Bloomberg – 7/22/2022  

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