The S&P 500 notched its third straight week of gains and closed Friday at 4514, almost 100 points higher than last Friday. The weeks focus was on inflation as Monday was flat awaiting Tuesdays Consumer Price Index (CPI) number. Before Tuesdays opening bell, the October CPI came in at 0.0%, lower than the expected 0.1%, and the markets took off. The S&P 500 climbed 1.9% for its best day since 27 April as investors celebrated on hopes that the Federal Reserve could finally put an end to its rate-hiking campaign. On Wednesday we had Octobers Producer Price Index (PPI) sliding 0.5%, marking its biggest monthly decline since April 2020. Hoping for a repeat of Tuesday on this good news, the markets remained muted (or maybe tired) as the S&P 500 had small gains for the remainder of the week. From a technical perspective, lets keep the focus on resistance and 1 Septembers intraday high of 4541. Were less than 1% away, and a break above that level could be the start of another step up to 27 Julys Year-To-Date (YTD) high of 4607. For next week I would expect similar market action to the last half of this week. Volume should be light with Thanksgiving on Thursday, and we are getting a little overbought/extended as the Bollinger Band Index (BBI) stands at 120, its highest level since October of last year. But what about after that? While no one can predict the future, lets look at Treasury yields. On 23 October, the 10-year Treasury yield was just under 5% and sitting at levels not seen since 2007. On Friday the 10 year yield had an intraday low of 4.40%, a 60 basis point drop in less than a month. When yields drop, investors look for better opportunities and will turn towards the markets. Demand for equities increases, driving stock prices higher. For TSP TIPS all individual funds (F, C, S, I) now have positive Performance Rankings, a weighted average of their 1, 3, 6, and 12 month returns. And with yields decreasing, were also seeing a nice bounce up in the F fund. As such we recommend no changes to our current investment mix. Lastly, we wish everyone a Happy Thanksgiving!!
The S&P 500 notched its third straight week of gains and closed Friday at 4514, almost 100 points higher than last Friday. The weeks focus was on inflation as Monday was flat awaiting Tuesdays Consumer Price Index (CPI) number. Before Tuesdays opening bell, the October CPI came in at 0.0%, lower than the expected 0.1%, and the markets took off. The S&P 500 climbed 1.9% for its best day since 27 April as investors celebrated on hopes that the Federal Reserve could finally put an end to its rate-hiking campaign. On Wednesday we had Octobers Producer Price Index (PPI) sliding 0.5%, marking its biggest monthly decline since April 2020. Hoping for a repeat of Tuesday on this good news, the markets remained muted (or maybe tired) as the S&P 500 had small gains for the remainder of the week. From a technical perspective, lets keep the focus on resistance and 1 Septembers intraday high of 4541. Were less than 1% away, and a break above that level could be the start of another step up to 27 Julys Year-To-Date (YTD) high of 4607. For next week I would expect similar market action to the last half of this week. Volume should be light with Thanksgiving on Thursday, and we are getting a little overbought/extended as the Bollinger Band Index (BBI) stands at 120, its highest level since October of last year. But what about after that? While no one can predict the future, lets look at Treasury yields. On 23 October, the 10-year Treasury yield was just under 5% and sitting at levels not seen since 2007. On Friday the 10 year yield had an intraday low of 4.40%, a 60 basis point drop in less than a month. When yields drop, investors look for better opportunities and will turn towards the markets. Demand for equities increases, driving stock prices higher. For TSP TIPS all individual funds (F, C, S, I) now have positive Performance Rankings, a weighted average of their 1, 3, 6, and 12 month returns. And with yields decreasing, were also seeing a nice bounce up in the F fund. As such we recommend no changes to our current investment mix. Lastly, we wish everyone a Happy Thanksgiving!!