Aviso Weekly Market Pulse: August 21st – August 25th

Aug 28, 2023

Market developments

Equities:
Stocks climbed as traders analyzed comments from Federal Reserve speakers, including Jerome Powell’s statement that officials will be cautious about raising interest rates, signaling a prolonged period of tighter policy. The S&P 500 had its best week since July, led by Nvidia, which closed the week up 6.5% after a volatile earnings week where they hit all-time highs after their release, only to retreat ~8% lower from that point. The Nasdaq was the leader this week, closing 2.3% higher, while the S&P 500 was up 0.82%.

Fixed income:
U.S. Treasury movements showed stability in the 10-year while the front-end lagged behind due to Fed Chair Powell’s indication of possible rate hikes. 10-year yields remained around 4.23% (relatively flat for the week), with 2-year yields at 5.05%, down 3 basis points on Friday, but up 12bps on the week. Buyers emerged in the front-end, leading to lower yields from peak levels. The market priced rate hike premiums of around 6bp for September’s meeting and 17bp for November, higher than the previous close of 15bp.

Commodities:
Oil closed the week lower, down 1.5% to $80 per barrel, with back-to-back weekly declines driven by concerns about China’s economy. Despite high US crude production and refinery usage, gasoline demand remains weak, down 8% from 2019 levels. Diesel demand is better, but rising fuel prices might affect consumption as crack spreads grow.

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