Market Notebook

Both equity prices, as measured by ticker SPY, and bond prices, as measured by ticker BND, declined last week.

Last week’s economic data releases seemed to indicate that inflationary pressures within the U.S. economy remain significant. In addition, several prominent CEOs suggested that growth in the U.S. economy is likely to slow. Several firms have announced job cuts or hiring freezes. As a likely consequence, market participants bid prices lower.

From a technical perspective, the situation appears somewhat brighter. Although prices for equities and bonds declined during the last week, they may still be considered in consolidation. This is excellent news. Ideally, both equity and bond prices would continue consolidating during the week ahead.

Regarding equity or bond purchases, recent price action has been such that it does not preclude buying. If equities or bonds are to be purchased, risk controls such as limiting position size or stop-loss orders are likely prudent.

During the week ahead, be prepared for continued volatility. The narrative driving price action during the last week is likely to persist. Inflationary pressures typically take longer to dissipate than to manifest. Additionally, it is very much the intention of the Federal Reserve to slow the expansion of the economy, thereby negatively affecting corporate profitability. While this dynamic need not necessarily cause lower prices, the uncertainty can easily cause elevated volatility.

Wishing you all the best in 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.