Stocks rallied on Friday, 12 November 2021, led by technology and communication services. However, the major averages finished lower for the week as inflationary pressures continued to reverberate through markets.
The October Consumer Price Index that was released on Wednesday, 10 November 2021, shows that inflation ran hotter than at any time in 30 years, but Friday’s report on plunging consumer sentiment prompted hope among traders that the Federal Reserve would delay any interest rate hikes.
While global stocks secured their first weekly drop since early October, their losses have been muted compared with the gyrations in the bond market.
The major averages ended the week with modest losses of less than 1%, but all remain within striking distance of their all-time highs. U.S. Treasury prices tumbled, driving the benchmark yield on the 10-year note up almost 12 basis points on the week, to 1.57%
Here are the closing levels on Friday: –
There were 2 articles on Bloomberg last week talking about Retail Sales and consumer demand in the U.S.
Households have amassed more than $2 trillion in excess savings during the Coronavirus crisis. This is thanks to the lockdowns during which spending was curtailed, the unprecedented stimulus money from the government, as well as the boom in equities and housing values. At the same time, as shown in a government report, the labor market is strengthening, with hiring and wages rising.
The second article states that the upcoming Black Friday deals will not be good as demand swamps supply. What does this mean for big retailer earnings? We will have to see if demand is good enough even without the discounts. And also, how inflation factors into an already nervous market.
For now, it still looks like inflation will continue to be the focus, but the market will look for any excuse to buy this market. Anytime there is market positive news it has led to a rebound or rally of some sort.
It is hard to think that this pattern won’t continue for now.
Source: CBOE, Reuters, Bloomberg
This commentary is written by James Gomes
James has been in the finance industry for over 30 years and most recently worked for a large US bank for more than 20 years.
While every effort has been made to ensure the accuracy of the information in this document, the DOO Group does not warrant or guarantee the accuracy, completeness or reliability of this information. The DOO Group does not accept responsibility for any losses or damages arising directly or indirectly, from the use of this document. The material contained in this document is provided solely for general information and educational purposes and is not and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, securities, futures, options, bonds or any other relevant financial instruments or investments. Nothing in this document should be taken as making any recommendations or providing any investment or other advice with respect to the purchase, sale or other disposition of financial instruments, any related products or any other products, securities or investments. A decision to invest in financial instruments, any investment related products or any other products, securities or investments should not be made in reliance on any of the statements in this document. Before making any investment decision, prospective investors should seek advice from their own financial advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision.
Without limiting any of the foregoing, in no event will the DOO Group or any of its affiliates be liable for any decision made or action taken in reliance on the information in this document and, in any event the DOO Group and its affiliates shall not be liable for any consequential, special, punitive, incidental, indirect or similar damages arising from, related to or connected with this document, even if notified of the possibility of such damages.
This document contains forward-looking statements. The forward-looking statements included in this document are based on current expectations that involve a number of risks and uncertainties. These forward-looking statements are based on the analysis of DOO Group of the statistics available to it. Assumptions relating to the forward-looking statement involve judgments with respect to, among other things, future economic, competitive and market conditions all of which are difficult or impossible to predict accurately. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the DOO Group that the forward-looking statements will be achieved. The DOO Group cautions you not to place undue reliance on its forward-looking statements and we assume no responsibility for updating any forward-looking statements. Expressions of opinion are those of the authors and are subject to change without notice.
This document is strictly confidential to the recipient. It is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly to other person or published, in whole or in part. For any purpose, neither this document nor any copy of it may be taken or transmitted into Singapore, Hong Kong, Malaysia, United Kingdom and the United States or distributed directly or indirectly in Singapore, Hong Kong, Malaysia, United Kingdom and the United States. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document should inform themselves about, and observe any such restrictions. By accepting this report, you agree to be bound by the foregoing instructions.