Stocks and Bonds Advance as Fed Pauses Interest Rate Hikes

The Dow (+1.2%), NASDAQ (+3.2%) and S&P 500 (+2.6%) exhibited fairly strong gains last week, while taxable bonds and tax-free municipal bonds gained a more tepid 0.2%.  The benchmark 10-year Treasury yield advanced about 0.02% to finish the week at 3.77%.

All eyes were on the Fed last week, as they did not raise interest rates for the first time in 11 consecutive meetings dating back to March 2022.  While most investors expected the Fed to hold rates like they did, the Fed’s speech afterward alluded to the “no rate hike” as being a pause and not necessarily a stop.  The Fed said they would continue to observe the economic impacts of the rate hikes over the last 15 months.  In the days prior to the Fed meeting on Wednesday, two key economic measures of inflation were released.  The Producer Price Index (PPI) and Consumer Price Index (CPI) each came in with values that implied that inflation is easing, but only slightly.  In the week ahead, my favorite economic reading will be published – Leading Economic Indicators (LEIs), which provides a forward-looking indicator of the economy.

^{Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.