The Weekly Economic Update

Alexis DuffyNewsroom

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In this week’s recap: Fed divided on policy as rates rise

Presented by The PensionmarkMeridien Team, August 23, 2023


Major U.S. stock market indexes declined last week, as the S&P 500 fell by 2.11%1, the NASDAQ 100 traded lower by 2.22%2, and the Dow Jones Industrial Average decreased by 2.21%3.

Perhaps the most recent Federal Reserve meeting minutes contributed to last week’s broad asset price declines. Notes from July’s Fed meeting showed that Fed officials see “upside risks4” to inflation, potentially leading to more rate hikes. However, Fed officials were ultimately divided5 on the need for more rate hikes at the July 25-26 meeting. 

Some officials cited the economic risks of rising rates further, while others continued to prioritize getting inflation under control through further rate hikes.


Markets like clarity and certainty, so eyes will be on the Jackson Hole Symposium this week.

Last year, Federal Reserve Chair Jerome Powel warned at this meeting of economic pain. “While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” he said6.


In a mostly “risk-off7” style of trading last week (meaning investors were risk-averse), the U.S. Dollar rose8 against other major currencies last week.

This contributed to declines in dollar-denominated assets, including oil, gold, and crypto.


Markets like certainty, and if they can’t have that, they look to bond yields for clues about the direction of the U.S. economy.

Notably, Treasury yields have been rising9 for the last few weeks, even though the recent prevailing summer narrative was that the end of rate hikes was in sight (which should have led to lower yields).

Perhaps the bond market is trying to tell us something. In case you’re curious, this CNN article10 briefly but clearly explains the relationship between yields, the stock market, and interest rates.


Consumer resilience is nothing short of amazing, as data for July showed a surprise uptick11 in spending. Can it continue? 

Here are July’s highlights:

  • Advance retail sales data showed an increase of 0.7% for July (seasonally adjusted) versus estimates of 0.4%.
  • There was a 1.9% jump in spending at online retailers.
  • Sporting goods and related stores saw an increase of 1.5% for the month.
  • Food service and drinking places were up by 1.4%.
  • Furniture sales declined by 1.8%.
  • Electronics and appliance stores reported a 1.36% decline.
  • Gas station sales rose 0.4% despite a rise in gas pump prices.

Americans have been continuing to spend impressively. However, credit card debt continues to rise12, and savings have been drying up.

Perhaps the talk in recent months of inflation beginning to recede has motivated consumers to spend, but let’s remember that credit card bills always come due.


The narrative could shift to a potentially “higher for longer” interest rate hike campaign, given a divided Fed and rising bond yields. Markets will seek clarity this week out of Jackson Hole.

Retail sales provided a bright spot in sentiment last week in an otherwise risk-averse market that saw higher bond yields and a higher U.S. dollar. 

Perhaps the short-term negative sentiment is overdone, perhaps it is not. It ultimately doesn’t matter for long-term investors, although some may use lower equity prices to increase asset allocation, should risk tolerance and investment objectives warrant such a move.

As always, I will keep you apprised of the most recent market developments and narratives as they occur.

If you have any questions or needs in the meantime, please feel free to email, or call us.

We are always here as a resource for you.

The PensionmarkMeridien Team may be reached at 866-871-9963 or

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Pensionmark® Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark® is affiliated through common ownership with Pensionmark Securities, LLC (member SIPC).

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

1. Trading View, August 20, 2023
2. Trading View, August 20, 2023
3. Trading View, August 20, 2023
4. CNBC, August 16, 2023
5. Reuters, August 16, 2023
6. Marketplace, August 17, 2023
7. Investopedia, March 28, 2022
8. CNBC, Augusts 18, 2023
9. Yahoo Finance, August 17, 2023
10. CNN Business, August 18, 2023
11. CNBC, August 15, 2023
12. Forbes, August 17, 2023

Pensionmark® Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark® is affiliated through common ownership with Pensionmark Securities, LLC (member SIPC).