Aviso Weekly Market Monitor: August 7th – August 11th

Aug 14, 2023

Market developments

Equities:
Tech mega caps faced renewed declines, causing stock markets to struggle as bond yields rose. The S&P 500 experienced a volatile week which ended with a small 0.30% loss, while the Nasdaq was down nearly 2%. Nvidia extended their decline, and market analysts suggest that upside momentum is waning as September nears, raising the possibility of a correction. The S&P is trading closer to a significant technical level, the 50-day moving average, potentially indicating further losses, although oversold conditions could lead to a bounce.

Fixed income:
Fed officials have acknowledged more efforts are needed to combat rising prices despite recent positive inflation data. U.S. consumer prices showed a modest increase for the second consecutive month excluding recent surges in commodity prices like oil and natural gas, possibly impacting the Fed’s stance. The U.S. 10yr yields closed the week above 4.15% while the 2yr closed ~4.9%, U.K. bond yields also rose as strong quarterly growth puts pressure on the Bank of England to consider further rate increases.

Commodities:
Oil futures marked their seventh consecutive weekly gain as Saudi Arabia and Russia’s supply cuts tightened crude oil availability. The International Energy Agency (IEA) forecasts further supply constraints into the fall due to OPEC+ actions and strong global demand. If supply targets hold, a significant drawdown in inventories could lead to higher prices.

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