Weekly Market Commentary - November 17th 2022

The Markets

Last week was remarkable for many reasons.

One reason is that sky watchers around the world had an opportunity to see a total lunar eclipse. The moon, Earth and sun aligned, causing the moon to appear crimson. We won’t see another total lunar eclipse for three years, reported Denise Chow of NBC News.

Another reason, and one that’s far more important to consumers and investors, is that data suggested that south of the border, inflation may be waning. The U.S. Consumer Price Index (CPI), which is a measure of inflation, was released last week. It showed that prices rose more slowly than expected in October. On an annual basis, headline inflation fell to 7.7 percent in October from 8.2 percent in September. North of the border, the Canadian CPI increased by 6.9 percent year-over-year, the same as in September.

American investors were enthusiastic, hoping the Federal Reserve might begin to take a more measured approach to monetary policy tightening. Fed officials were probably happy, too, although inflation remains well above their two percent target. “Central bank officials have emphasized they will need to see several months of deceleration in price gains before they will be convinced they have made progress in their fight against inflation,” reported Megan Cassella of Barron’s.

The inflation news may lift consumers’ spirits, too. Last week, the University of Michigan Consumer Sentiment Survey reported that sentiment dropped sharply in October, erasing about half of recent gains. “Instability in sentiment is likely to continue, a reflection of uncertainty over both global factors and the eventual outcomes of the [U.S. midterm] election,” reported Surveys of Consumers Director Joanne W. Hsu.

Last week, major North American stock indices rose in value. U.S. Treasury and Government of Canada bond yields declined and the yield curve remained inverted.

Source: FactSet

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“These are the times in which a genius would wish to live. It is not in the still calm of life, or the repose of a pacific station, that great characters are formed. The habits of a vigorous mind are formed in contending with difficulties. Great necessities call out great virtues. When a mind is raised, and animated by scenes that engage the heart, then those qualities which would otherwise lay dormant, wake into life and form the character of the hero and the statesman.”

—Abigail Adams, Founding Mother

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