At PearTree Advisory Group, it is important to us that you are well informed about what’s happening in the markets. Here are a few of the key topics of conversation that we feel deserve the most attention this month. If you have any questions or would like to continue the conversation, let us know, and we appreciate the opportunity.
Economic data for last week included stronger-than-expected results for retail sales, while inflation continued to come in elevated for producer, consumer, and import prices. Job openings and jobless claims also continued to strengthen as labor markets show improvement.
U.S. stocks moved higher last week, resulting in a bounce off the recent -5% minor correction beginning in September. Congress reached a deal to extend the debt ceiling from mid-October to early December, which markets cheered, but perhaps just prolonged the inevitable political showdown by a few more months. Inflation has persisted as a concern, echoed by several Fed members in their speeches, which may have helped again push interest rates higher.
U.S. bonds were pummeled again last week, as interest rates continued to creep higher—and the 10-year treasury again reaching the 1.6% mark. The dollar was little changed last week, with foreign bonds all losing ground because of rising rates alone.
On the COVID front the “Great Reopening” continues. An announcement came on Friday October 15th and it’s a biggie. The White House announced last Friday that travel restrictions for fully vaccinated visitors will be lifted on 11/8. The list will encompass an additional 26 nations, called “Schengen countries” in Europe, France, Germany, Italy, Spain, Switzerland, and Greece, as well as Britain, Ireland, China, India South Africa, Iran, and Brazil. Prior to this restriction, the US still allowed inbound travelers from 150 nations. But this expands the list. This is a significant step towards “normalizing” life. The beneficiaries of this should be companies catering to travel, such as airlines, cruise lines, hotels, restaurants, and cities with tourism.
The bottom line.
There are positive changes to global restrictions from COVID. This will continue to benefit parts of the economy that had suffered severe destruction from the lockdowns. There will always be bad news, but the equity market has risen in the face of skepticism, particularly from market pundits. There will be a market top, so top callers will eventually be proven correct. At this point the math that drives our investment decisions remains mostly positive. We continue to monitor portfolio risk. My goal is help you stay calm and keep your goals on track!