Closing Thoughts for the Week

If there’s anybody out there still holding out hope that the Fed pivot trade might still be in play, you might want to fold your hand now. The Treasury market, somewhat surprisingly, remained steady. I think this was traditional risk-off behavior returning to the markets even if for only a short time. It looks like conditions in the housing market are really getting ready to roll over here.

The U.S. equity markets finally took a bit of a break from the 2-month run that’s added nearly 20% to stock prices. The big challenge remains trying to thread the needle between controlling inflation and avoiding recession. Last week’s data shows that there’s still some resiliency for both the consumer and the economy.

The July CPI and PPI inflation reports kept investors in a bullish mood for another week. This “stocks up, bonds down, small-caps outperforming” trend looks like a pretty convincing risk-on move. Investors have liked a lot of things they’ve heard over the past few weeks, but this economy is far from out of the woods.