Investors cautious ahead of rate announcements this week

Market Review week-ending 23rd January 2023 from Realm IM

Global stock-markets were generally higher last week despite some disappointing fourth quarter earnings from major US companies including Microsoft, IBM and Intel. Equities were higher on growing optimism that a recession in the US might be milder than previously expected (Bank of America), or avoided altogether (Goldman Sachs), and that the Fed may be able to pivot on monetary policy later this year as inflation cools fast.

Leading indicators do not necessarily confirm the more optimistic views. The Conference Board reported that its ..

Full report:
https://realmim.com/investors-cautious-ahead-of-rate-announcements-this-week/

Fed will be watching jobs data like a hawk

Market Review from Realm Investment Management – week ending 20th January 2023

US stocks sold-off midweek on increasing recession fears but bounced back strongly on Friday. Comments from US Federal Reserve officials that the central bank has not finished with the tightening campaign worried investors – for instance, Fed Vice Chair Lael Brainard commented “policy will need to be sufficiently restrictive for some time“.

Things change day to day though and on Thursday weak economic data indicated that policy is having the desired impact and helped the view that the Fed can slow the pace of further rate hikes. The rally back on Friday was led by tech and growth stocks. Markets are now pricing in a 0.25% rate increase in February.

On the other side of the coin though, and for the longer term focus, US employment data is still indicating that the labour market remains tight (not what the Fed wants to see) evidenced by last week’s jobs report which showed solid growth and lower-than-expected unemployment claims.

Full report:
https://realmim.com/fed-will-be-watching-jobs-data-like-a-hawk/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

US inflation data taken well by markets

Investors breathed a sigh of relief after the much-anticipated December US CPI report was released on Thursday. The annual inflation rate came in at 6.5%, the sixth straight month of slowing but still remains more than three times above the central bank’s target of 2%. Investors are hopeful that US inflation peaked at 9.1% in June of last year.

Bonds and stocks rallied with much of the action apparently driven by short-covering. Markets are now pricing in a 90% chance that the next move in interest rates will be a smaller-than-previously-expected hike of 0.25% in early February.

Full report
https://realmim.com/us-inflation-data-taken-well-by-markets/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

Stocks rally following US jobs report

Market Review from Realm Investment Management – week ending 6th January 2023

Stocks rallied at the end of last week and the beginning of this week following the US jobs report for December showed slowing wage growth. Investors are optimistic that this will ease pressure on the Fed regarding further rate increases and lifts the likelihood that the central bank may even begin cutting rates later in the year.

Full report
https://realmim.com/stocks-rally-following-us-jobs-report/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

US Stocks give back a strong open on first trading day of 2023

Market Review from Realm Investment Management – week ending 30th December 2022

US stocks opened trading for the new year on a positive note but have lost ground as recession fear and concerns over corporate earnings quickly resurfaced.

The consensus view: a mild recession is imminent with the Fed likely to raise rates further in the first quarter but begin cutting later in the year. In anticipation of that pivot…

Full report
https://realmim.com/us-stocks-give-back-a-strong-open-on-first-trading-day-of-2023/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

Powell suggested rates will stay high for some time – markets did not like it

Market Review from Realm Investment Management – week ending 16th December 2022

On Tuesday, a lower-than-expected U.S. inflation reading of 7.1% increased confidence that the Federal Reserve would slow its tightening policy. Stocks rallied and the Dollar fell.

At the end of the Federal Reserve’s two-day policy meeting on Wednesday, the central bank duly delivered the expected 0.5% hike in interest rates but stocks fell after an suggestion from Fed Chair Jerome Powell that interest rates would stay elevated for some time. This despite indications that

Full report
https://realmim.com/powell-suggested-rates-will-stay-high-for-some-time-markets-did-not-like-it/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

Busy week for data underway

Market Review from Realm Investment Management – week ending 9th December 2022

US stocks, especially small-caps, ended last week on a soft note after Friday’s producer price (PPI) data showed a rise of 0.4% in November. That’s higher-than-expected inflation data and all eyes will now be on the latest US CPI report tomorrow, Tuesday, in the hope it will indicate some slowing. The UK will also be releasing inflation data this week.

On Wednesday this week, the US Federal Reserve is expected to announce a hike in interest rates of a further 0.5% and investors will be keen to hear the central bank’s forecasts for inflation and interest rates. The Bank of England also has a monetary policy meeting this week; the BoE is expected to announce a 0.5% rate hike on Thursday.

Full report

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

Fed minutes were encouraging but concerns increase over China

Market Review from Realm Investment Management – week ending 25th November 2022

Stocks rallied for the week helped by some decent US earnings reports and the release on Wednesday of Fed minutes from the last FOMC meeting. A number of Fed members had recently hinted that the size of the next rate hike might be less than previously expected, and this was affirmed in the minutes – “a substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate.” A hike of 0.75% next month is no longer the consensus and stocks rallied. Utilities was the best performing Sector with Energy stocks lagging as the price of oil fell sharply (today Crude Oil futures have fallen to their lowest level year-to-date).

Full report
https://realmim.com/fed-minutes-were-encouraging-but-concerns-increase-over-china/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

Fed hawk upsets markets

Market Review from Realm Investment Management – week ending 18th November 2022

Equity markets were mixed last week following a strong advance the week before. UK and European markets were generally a little higher with US stocks giving back some of the previous week’s gains.

In the US, speeches from Fed officials were quite hawkish including one from James Bullard, president of the St Louis branch, who lifted his view of where the Fed funds rate should be to between 5%-5.25%. His comments that rate rises so far had only had a “limited effect on observed inflation” sent stocks lower on Thursday.

US recession worries increased as the 2-year/10-year yield curve, a much-watched indicator, inverted further to its lowest level in over forty years and consequently a recession is now expected by many investors. This now begs the questions, how long it will last? and how bad it will be?

Full report:
https://realmim.com/fed-hawk-upsets-markets/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.

Hot performance from stocks after cooler than expected inflation data

Market Review from Realm Investment Management – week ending 11th November 2022

In last week’s US Midterm elections, the forecasted “red wave” did not materialise and a surprisingly strong performance from the Democrats saw them retain control of the Senate. They also have a chance that even the House could remain theirs, although that hope looks to be fading today (Monday) with Republicans edging ahead in a tight race. Either way, the outcome mat not be decided for a few days yet.

Last week was also very much about Thursday’s cooler-than-expected US Consumer Price Index (CPI) data. CPI was just 0.2% less than expected and equities responded with a strong rally – the S&P 500 ended the week with its best performance since June. Investors obviously saw much to cheer but some commentators have advised caution saying there remains plenty to be concerned about including the outlook for corporate earnings. It should also be noted that Fed Chairman Jerome Powell reiterated his view that the “historical record cautions strongly against prematurely loosening policy”.

Full report

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’