Economic Market Summary

Market Down and Dirty

Last Week’s Economic/Market Summary


  •  U.S. equity indices ended the week sharply lower across the board.

    • S&P 500 -3.99% Dow -4.22%, Russell 2000 -2.91%, Nasdaq -4.44%1

      • The All-Country World Index sank -3.05%.1

    • S&P 500 sub-sectors were all lower other than Energy last week.

      • Energy was the lone positive sector as Crude rallied over 3%.1 

      • Technology led to the downside with a loss of 5.56%.1 

    • The CBOE Volatility Index (VIX) moved higher by 24% and closed at 25.56. 1 

  • US Treasury bond yields mostly rose with shorter maturities rising more than longer ones.

    • US 2yr +0.15% at 3.38%, 10yr +0.05% to 3.04%, 30yr -0.02% to 3.21%.1 

    • The benchmark 10yr rose back above 3% for the 1st time in 6 weeks. 1 

  • Commodities as an aggregate asset class were mixed last week.

    • WTI Crude rose 3%.1 

    • Gold declined 0.52%1 

    • The US Dollar index rose 0.61%.1 

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

    • The PCE price index showed inflation coming slightly down year-over-year. 1 

    • 2nd quarter GDP was revised to -0.6% from -0.9%.1 

    • Personal income & spending edged higher in July. 1 

  • An index of equities outside the US (FTSE All-World ex-US) sank -2%.1 


  • US Equities moved notably lower last week as all eyes were on Fed Chair Jerome Powell at the Jackson Hole economic conference last week.

    • Powell’s speech was very short as compared to past occurrences and he showed iron-clad resolve to continue hiking interest rates to cool inflation. 

    • He stated that the costs of reducing inflation may be painful for growth but are necessary to restore price stability. 1

      • This immediately caused investors to begin repricing future expectations for the Federal Reserve’s interest rate movements. 

    • As we’ve discussed, the risk to the Fed in this tightening cycle is not the stock market going down or economy slowing, but inflation sticking around at higher levels for a longer period of time.

      • They will hike and slow-down the economy until inflation is in their preferred range. 

  • The more growth oriented areas of the stock market sold off the hardest on this reiteration by the Fed.

    • The Nasdaq lost over 4% as the Tech sector led to the downside by a wide margin. 1

      • Consumer Discretionary was the 2nd worst performer last week at -4.69%.1 

      • Powell’s latest hawkish missive threatens to open up a new front in the ever-raging battle between tech stocks and Treasury yields — potentially hurting money managers who’ve just plunged back into US mega cap companies in droves. 

    • Energy was the lone positive sector last week as WTI Crude oil finished the week up over 3%.1

      • Energy was helped by Saudi Arabia’s oil minister indicating last week that OPEC may cut production to stabilize the oil markets. 1 

  • US Treasury yields reacted to the Fed in a manner that saw the short-end shoot up much more than longer maturities.

    • This was to be expected as the 2yr US Treasury is driven mostly by Fed policy.

      • The 2yr ended the week at 3.38% and is flirting with its highest level since 2007. 1 

    • With the rise in the 2yr and the 10yr settling around 3%, they remain deeply inverted which historically has been an indication of the economy cooling. 1 

    • While Federal Reserve Chair Jerome Powell’s speech was unequivocally hawkish, the market remains near-evenly divided about the outcome of next month’s policy meeting. 

    • The US yield curve between the five and 30-year maturities inverted for the second time this month, while the gap between the higher two-year yield and the 10-year rate widened. 1

      • The inversions suggest the bond market anticipates a recession is the necessary sacrifice to get price pressures back under control. 

  • International equities also sold off last week, helped by further rises in US Dollar strength.

    • On top of slowing demand, the surge in power prices, along with threats to supply, is affecting businesses from China to Germany to the US. It jacks up costs and threatens margins, while also sucking money out of their customers’ pockets, destroying demand.

      • Estimates in Europe see energy costs being 10x higher than last year this winter. 1 

    • In response to their weakening economy, China’s central bank cut key interest rates a 2nd time in a week and added $44B in stimulus to their banking sector. 1 

Ryan A. Mumy, CFP®,

AIF® – Chief Investment Officer

Contact: 828/855-9400 or 

 1 Source: Bloomberg – 8/26/2022  

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