Presented by The PensionmarkMeridien Team, September 18, 2023
THE WEEK ON WALL STREET
With the most recent inflation data showing rising prices in several products and services, I thought now would be an opportune time to reach out with an overview of the inflation data and the upcoming Federal Reserve meeting.
Overall, major U.S. stock indexes traded in mostly narrow trading ranges last week, digesting the inflation data while eagerly awaiting this week’s Fed rate decision and commentary.
Putting numbers to the week, theS&P 500 declined marginally by 0.16%1, the NASDAQ 100 fell by 0.51%2, and the Dow Jones Industrial Average rose very slightly by 0.12%3
INFLATION WARMING – THE LATEST
August Consumer Price Index (CPI) data4 showed inflation rising a tick more than expectations, with a 3.7% year-over-year increase versus the 3.6% expected5. Breaking it down further:
- CPI increased 0.6% month-over-month, in line with estimates. This is the biggest monthly jump this year.
- Gasoline6 was the primary culprit in the August CPI metric’s rise.
- Core CPI (which removes volatile food and energy from the data) rose 0.3%, higher than expected.
- Food prices, both “at home” and “away from home,” also rose. No surprises there!
- The Producer Pricing Index (PPI) also ran hot in August7.
Some analysts say that the higher inflation numbers for August are nothing to worry about8. Others feel differently. Markets took the mixed yet higher inflation data in stride, mostly shrugging off the CPI data after its release.
Now, the market is holding its breath ahead of the Federal Reserve meeting this Wednesday.
WEDNESDAY IS “FEDDAY”
Despite last week’s higher August inflation reading, probabilities have remained very high9 that the Fed will leave rates unchanged on Wednesday, according to the CME FedWatch Tool.
Any change in rates on Wednesday would be a shock to the market at this point. But it’s not the rate decision that many are looking at – it’s the Fed’s guidance and statement after the decision is released.
What is the Fed thinking about the November meeting? How do the recent inflation metrics affect their policy mindset? Will there be more rate hikes – wasn’t the Fed supposed to be almost done?
All of these questions are on the mind of the collective market right now. Inquiring minds want to know!
TREASURY YIELDS RISE
Though markets have a 98% certainty (as of last Friday’s close) that the Fed will leave rates unchanged at this week’s meeting, Treasury yields rose last week.
Rising Treasury yields the week ahead of the Fed meeting may indicate the market’s expectations for the Fed to leave the door open for more hikes after this week’s September meeting.
CRUDE OIL & GASOLINE MARCH HIGHER
Gasoline reached 2023 highs10 last week, as rising crude oil prices translate to rising prices at the pump.
Crude for October delivery marched higher last week, adding close to 3.73%11 and closing last week near $90.7711 per barrel.
Oil supply concerns are the focus, as U.S. Crude Oil in the Strategic Petroleum Reserve has declined sharply over the last year (by around 20%12).
BEAT GOES ON
Things won’t always be all about the Federal Reserve and inflation. But for now, the Fed meeting and subsequent commentary are front-and-center for the markets this week.
The recent mixed, yet higher inflation data is certainly a deviation from what we have seen over the last year. Perhaps a rise was to be expected, given interest rates have remained firm even as we’ve gotten more tame inflation prints over the last year or so.
Regardless, we will keep our eyes on the Fed this week, looking for any clues or direction on future policy.
In the meantime, if you have any investing questions or needs, don’t hesitate to reach out by phone or email.
We are always happy to be a resource for you.
The PensionmarkMeridien Team may be reached at 866-871-9963 or meridienteam@pensionmark.com
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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).
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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.
Citations:
1. Trading View, September 17, 2023
2. Trading View, September 17, 2023
3 Trading View, September 17, 2023
4. US Bureau of Labor Statistic, September 13, 2023
5. CNBC, September 13, 2023
6. Oil Price, September 14, 2023
7. CNBC, September 14, 2023
8 CNBC, September 14, 2023
9. CME Group, September 18, 2023
10. Yahoo Finance, September 16, 2023
11. Trading View, September 17, 2023
12. Y Charts, September 8, 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).