The selling took hold last week with all five indices of the major markets closing lower. Despite this being a holiday shortened trading week, the S&P 500 logged the greatest weekly losses year to date and the third consecutive loss at that. Overall, economic concerns weighed on the markets regardless of the market segment. At the sector level, only energy managed to close higher with a very slight increase of 17 bps. Meanwhile, Consumer Discretionary and Communication Services experienced the greatest losses with Real Estate not too far behind. The trading week began Tuesday with the US Services and Manufacturing PMIs, which both increased month over month as inflation concerns subsided. The federal reserve did increase interest rates by 25 basis points from 4.5 to 4.75%. The CME Group has projected the greater probability of additional 25 basis point increases in the future meetings, comments like these have shifted the longer-term rate expectations. The CME Group’s FedWatch tool now reflects a likely peak of interest rates at 5.25 to 5.5% by June and the highest probability of staying at or near that level throughout the end of 2023. This shift in overall sentiment pulled on the bond market. Interest rates climbed higher once again on the shorter to intermediate durations while the longest duration remained relatively unchanged but further inverted. As a result, bond markets dropped. The Bloomberg Barclays Aggregate bond index fell nearly a percentage point, giving back nearly all the YTD gains. At Leap Wealth, we are here to help our clients manage through all the highs and lows. Contact us today to learn more.
The federal reserve did increase interest rates by 25 basis points from 4.5 to 4.75%.
March 01, 2023