August 15, 2023

Weekly Market Update

By Michael McKeown, CFA, CPA - Chief Investment Officer

Weekly Market Update

Chart of the Week

There is an old quip that the bond markets are smarter than the equity markets. Maybe it is because bond investors think about downside risk more, wanting to get the return of principal and not just on it. Either way, both equity and corporate bond prices pushed higher this year.

Below is an index of non-financial companies rated BBB. This rating is the lowest level for investment-grade companies. A lower spread means investors are demanding less yield over Treasuries to own the bonds. The spreads are at the lowest levels since the start of 2022. There are little signs of stress, and if anything, show bond investors are less worried about defaults in this sector.

BBB Spreads

What We’re Reading

A Few Stories About Big Decisions – Morgan Housel
How Inflation Befuddled Everyone – Morningstar
The Winner’s Edge – Farnam Street
Most Americans Are Concerned About Having Enough Money for Retirement — But Having an Advisor Helps – RIA Intel

Podcast of the Week

Passion and Mission at the Packard Foundation – Capital Allocators

Last Week

Inflation data came in below expectations as the year-over-year change was lower by 0.1%. This is another feather in the cap for those expecting the Federal Reserve not to hike interest rates again.  Retail sales jumped higher as consumers kept spending up over July.

The Past Week

The Week Ahead

On Wednesday, we will have a further idea of how 7% mortgage rates are affecting housing. Industrial activity and the Philly Fed Index will be important indications of the economic trend.

The Week Ahead

Thank you for reading.

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