Market Notebook
Discussion –
PRICE ACTION:
Equity prices, as measured by ticker SPY, and bond prices, as measured by ticker BND, closed significantly lower on the week.
TECHNICAL ANALYSIS:
SPY price action suggests that equities are in consolidation and could shortly transition to a downward trend.
Bonds appear to be established in a downward trend.
SENTIMENT:
Market participant sentiment suggests pessimism. Likely culprits for pessimism are the wars in Ukraine and the Middle East and the concern that the Federal Reserve will continue with a tighter monetary regime.
ECONOMY AND FUNDAMENTALS:
Economic indicators within the Market Notebook remain mixed.
Jobless claims are to be watched as an important indicator of a potential recession. Thus far, jobless claims are not indicative of a near-term recession.
From a fundamental perspective, the downward trend in bonds seems limited by the fundamentals associated with inflation and recession. If inflation comes down or a recession occurs, the downward trend in bonds could be broken. Potentially, sharply broken.
THE CONFERENCE BOARD’S LEADING ECONOMIC INDEX, OCTOBER 19th, 2023:
“The LEI for the US fell again in September, marking a year and a half of consecutive monthly declines since April 2022,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “In September, negative or flat contributions from nine of the index’s ten components more than offset fewer initial claims for unemployment insurance. Although the six-month growth rate in the LEI is somewhat less negative, and the recession signal did not sound, it still signals risk of economic weakness ahead. So far, the US economy has shown considerable resilience despite pressures from rising interest rates and high inflation. Nonetheless, The Conference Board forecasts that this trend will not be sustained for much longer, and a shallow recession is likely in the first half of 2024.”
All the best during the week ahead!
Disclaimer: Nothing in this discussion should be considered investment advice. The content of this discussion is strictly my personal opinion and subject to change at a moment’s notice. Investment advice can only be provided to you by your investment professional and not by a general market discussion such as this one. If you wish to speak with an investment advisor, contact us. We can probably help.