Aviso Weekly Market Monitor: July 10th – July 14th

Jul 17, 2023

Market developments

Equities:
Earnings season kicked off with positive quarterly earnings from JP Morgan, Wells Fargo, and Citigroup, who all benefited from higher interest rates, while Pepsi and Delta Airlines also exceeded lowered expectations as consumers demonstrate a willingness to spend despite higher prices. Megacap stocks also performed well, with Nvidia reaching a record high this week and UnitedHealth Group saw a surge in stock price as quarterly profits alleviated concerns about escalating medical costs. With inflation moving lower and a strong start to earnings season, the S&P 500 and Nasdaq closed the week up 2.4% and 3.3% respectively.

Fixed income:
At the end of a week marked by optimism that the Fed would be closer to ending its interest rate hikes, a report showed consumer sentiment soared to an almost two-year high, while short-term inflation expectations rose. Bonds reacted immediately, with the front-end of the U.S. curve bearing the brunt of the selling. However, with CPI data coming in lower than expected earlier in the week, U.S. 10yr yields ended the week ~25bps lower at 3.82%, while 2yr yields fell around 20bps to 4.76%.

Commodities:
Oil prices fell on Friday but closed the week up over 2% as prices remain near 10-week highs due to a weakening USD and expectations of reduced interest rate increases by the Federal Reserve. Tight supplies from Saudi Arabia’s production cuts and disruptions in Libyan output have supported the market. China’s strong crude oil demand and strategic stock building have also contributed.

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