Economic Market Summary

Market Down and Dirty

Last Week’s Economic/Market Summary


  • U.S. equities moved higher last week, bolstered by inflation ticking lower in December.
    • S&P 500 +2.69% Dow +2.00%, Russell 2000 +5.33%, Nasdaq +4.82%1
      • The All-Country World Index rose +3.35%.1
    • S&P 500 sub-sectors ended the week mostly higher.
      • Consumer Discretionary led to the upside by a wide margin at +5.78%.1
      • Defensive sectors of Healthcare & Staples were the only negative sectors.
    • The CBOE Volatility Index (VIX) sank over -13% to end at 18.30. 1
  • US Treasury bond yields moved lower last week across the yield curve.
    • US 2yr -0.02% at 4.22%, 10yr -0.06% to 3.49%, 30yr -0.06% to 3.61%.1
    • Market participants continue to discount the Fed’s stated target rate of above 5%.1
  • Commodities as an aggregate asset class moved higher last week.
    • WTI Crude gained +8.47%.1
    • Gold rose +2.92%.1
    • The US Dollar index declined -1.65%.1
  • In our opinion, U.S. economic data was mixed last week.
    • The Consumer Price Index was down 0.1% in December, but remained up 6.5% since last year. 1
    • Consumer Sentiment rose to a 9-month high in January. 1
    • The World Bank slashed its 2023 GDP outlook for all major country’s economies. 1
  • An index of equities outside the US (FTSE All-World ex-US) rose by +3.29%.1


  • US Equities renewed their charge higher to begin 2023 as investors welcomed further cooling in inflation data and continue to call the Fed’s bluff about where they’ll get interest rates to.
    • Market participants appeared to take the CPI data as giving Fed officials room to further downshift the pace of rate hikes. (The “Pivot Hope” we’ve discussed in the past.”)
      • The bull market case for many at present is simply “the Fed will stop hiking rates” and/or “back-to-back declines in the S&P 500 are rare historically.”
      • While the latter could be true, we do not consider this true analysis.
      • The questions remain: (1) how much cooling will be sufficient to get the Fed to pause its rate-hiking campaign? and (2) how much damage will past super-charged Fed rate hikes cause to the economy as these have a lagging effect?
    • The small-cap tracking Russell 2000 & tech-heavy Nasdaq led to the upside by a wide margin with gains of 5.33% & 4.82% respectively. 1
    • The S&P rose 2.9% while international equities caught a tailwind from the US Dollar weakening to finish up over 3%.1
  • S&P 500 sub-sectors were mostly positive on the week.
    • The most beat-up areas of the market led to the upside – Consumer Discretionary & Tech. 1
    • Financials also finished the week up over 2% despite weak outlooks from major US banks that reported last week. 1
    • Interesting to note that Homebuilders have surged higher of late despite Homebuilder sentiment remaining in the toilet…and weakening further of late. 1
      • We’re confident this divergence will eventually close.
  • US Treasury yields continued to decline in the 2nd week of 2023.
    • Short and intermediate-term yields declined sharply, reaching the lowest levels in three months, while the 10-year slid below 3.5%, extending a rally from about 3.8% at the start of the year. 1
    • Fed officials have been mixed on their outlooks with the majority favoring continuing to hike aggressively until the Fed Funds rate reaches 5%+ while others have said the recent data warrants a slowed pace of tightening.
      • Market participants continue to position for the Fed to soften substantially in their stance despite what Chair Powell & other Fed officials have repeatedly stated.
  • The price of gasoline relative to US wages has recently declined significantly which has helped the consumer/demand component of the economy significantly. 1
    • The question to consider is whether this is priced into stock market currently?
    • A new rise in the price of energy could change market expectation for equity multiples & interest rates significantly.
      • Note the last 2 times this type of drop has been observed in this key relationship were during deep recessions. 1
    • December data from the New York Fed showed an additional large increase in credit card balances with nearly half of cardholders carrying debt month-to-month. 1
  • Commodities in general have begun 2023 on a ripper higher!
    • Much of this can be attributed to the expectations for a China reopening & stimulus.
    • We remain cautious and will continue to monitor these markets.

Ryan A. Mumy, CFP®,

AIF® – Chief Investment Officer

Contact: 828/855-9400 or 

 1 Source: Bloomberg – 1/13/2023 

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