John Hancock: Weekly Market Recap Week Ended September 23rd

Fed’s bitter medicine

For its third meeting in a row, the U.S. Federal Reserve sought to keep inflation in check by approving a 0.75 percentage point increase in its benchmark interest rate. The move pushed the rate to a range of 3.00% to 3.25%—a level last seen in 2008. Fed officials projected they would lift the rate by at least another 1.25% over the last two meetings of this year.

Soaring yield

The yield of the 10-year U.S. Treasury bond climbed for the eighth week in a row, reaching around 3.69% on Friday. The yield is up from 3.45% at the end of the previous week and from 2.64% at the end of July. The inversion of the yield curve became more pronounced, as the 2-year Treasury yield rose to about 4.20%—the highest since 2007.

Sub-$80 oil

With recessionary fears growing, the price of U.S. crude oil dropped around 7% for the week, slipping below the $80-per-barrel mark for the first time since early January. As recently as early June, oil briefly traded above $120.

PCE inflation ahead

A report scheduled to be released on Friday will be closely watched for any further signs that U.S. inflation may have peaked. The government will update its Personal Consumption Expenditures Price Index, the Fed’s preferred gauge for tracking inflation. The most recent monthly report showed that PCE inflation moderated at an annual rate of 6.3%, down from 6.8% in the previous month.

Source: https://wmr.jhinvestments.com/