Market developments
Equities:
The U.S. stock market saw increased volatility and a decline in response to a $4 trillion options event, alongside concerns about a strike impacting Detroit automakers. Big tech companies like Nvidia led the losses, with the S&P 500 erasing gains for the week and the Nasdaq 100 dropping nearly 2% on Friday. Chipmakers were affected by news that Taiwan Semiconductor Manufacturing Co. requested delays in highend equipment shipments. The VIX volatility index climbed, and the S&P 500 and Nasdaq Index closed -0.16% and -0.39% respectively for the week.
Fixed income:
Investors are showing a preference for longer-term bonds, anticipating that the Federal Reserve is nearing the end of its interest-rate hiking cycle. Yields on longer-dated debt are attractive, even if the Fed continues to raise rates. The scarcity of long-duration offerings has created a premium on such bonds. This trend has led to strong demand for longer-maturity bonds, particularly from insurance and pension investors. Government 10yr yields in both Canada and the U.S. ended the week slightly higher.
Commodities:
Oil prices increased for the third consecutive week due to production cuts by Saudi Arabia and Russia, tightening the global oil market. Oil settled near $91 a barrel, the highest since November. The International Energy Agency and OPEC warned of a market deficit through the end of the year, driving prices up by about 4% for the week.