U.S. and International Equities
Markets Finish Mixed
For the second straight week, the majority of U.S. market indexes finished lower as the continued Eastern European conflict and a sticky Consumer Price Index inflation report renewed inflation concerns. Last week’s Federal Open Market Committee meeting minutes added to worries about monetary policy and continued to weigh on investor sentiment. International equities, per the MSCI EAFE and the MSCI EM indices, were not immune and also fell during the week.
Consumer staples had a strong showing for the second consecutive week, while value sectors materials and industrials led the week. The energy sector, which has been the sector leader so far for 2022, continued its run higher on strong energy prices. Growth sectors trailed for the week as investors took note of the Fed’s hawkish sentiment, selling off stocks with relatively higher valuations.
Fixed Income Lower
The Bloomberg Aggregate Bond Index finished lower for the second straight week, reverting back to its downward trend that has prevailed so far in 2022. High-yield corporate bonds, as tracked by the Bloomberg High Yield index, also followed suit.
Crude oil finished higher this week on increased Eastern European tensions. This marks a reversal from the prior two weeks when increased supply, from the release of international oil stockpiles, and concerns over reduced demand, relating to Chinese COVID-19 lockdowns, had put downward pressure on oil prices. Moreover, natural gas prices finished higher for a fourth consecutive week as the potential for more energy related sanctions relating to Ukraine-Russia war continued to spook markets. The major metal prices for gold, silver, and copper also finished the week higher. All three metals are solidly higher for 2022.
Economic Weekly Roundup
The March headline Consumer Price Index increased by 8.5% year-over-year. This was the fastest annual gain since December 1981. Increasing food, energy, and housing costs accounted for much of last month’s gain. Core CPI, which excludes food and energy costs, increased 6.5% on an annual basis. This being said, on a month-over-month basis, core CPI came in slightly less than economists’ expectations.
March Retail Sales
Retail sales for March increased fractionally in comparison to February. This month’s reading also came in slightly below economists’ expectations. The largest gain in last month’s retail sales was seen at gas stations. This category saw an 8.9% increase in sales as gasoline prices rose over 18% for March. Online sales showed a steep decline, receding almost 6.5% compared to February. Across the board, retail sales increased almost 7% from March 2021.
Initial Claims Missed Expectations; Continuing Claims Decline
Initial claims for unemployment insurance for the week ending April 9 came in above the previous’ week’s total as well as above economists’ expectations. In addition, continuing claims declined from the prior week which was also below economists’ estimates. The data continues to illustrate a tight labor market that is unlikely to dissuade the Fed from focusing on inflation in the near term.
The following economic data is slated to be released during the week ahead:
- Monday: April National Association of Home Builders Housing Market Index
- Tuesday: March Building Permits and Housing Starts
- Wednesday: Federal Reserve Beige Book, March Existing Home Sales
- Thursday: Weekly Initial and Continuing Unemployment Claims, March Leading Indicators
- Friday: April Purchasing Managers Index
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