Stocks and Bonds Soar as Investors Bet the Fed is Done Raising Rates

Wow, what a fantastic week!  The Dow (+5.1%), NASDAQ (+6.6%), and S&P 500 (+5.9%) each posted very strong gains for the week.  Similarly, taxable bonds and tax-free municipal bonds gained almost 2% for the week.  Hence, both stocks AND bonds exhibited such strong gains that they wiped out all the losses incurred through October, just as investors are receiving their October statements.  The 10-year Treasury bond yield fell sharply, falling 0.29% to 4.56%.

The stock and bond markets moved swiftly in a favorable way, as investors interpreted economic data in a manner leading them to believe that the Fed will be done raising interest rates during this cycle.  Hence, the perfect example of “bad news is good news”.  For example, the Institute of Supply Management (ISM) manufacturing data fell further, suggesting a contraction in manufacturing in the US, as well as worldwide.  The number of new jobs in October also fell, adding to some signs of weakness in the economy.  The jury is also still out as to the impact to the economy associated with the United Auto Workers (UAW) strike that just got resolved.  In short, investors were “pleased” with weaker economic data, as it led them to believe the Fed has concluded its interest rate hiking campaign.

The stock market will be open on Friday, but the bond markets will be closed to celebrate Veteran’s Day, which is Saturday.  For those who served in our military, I wish to personally thank you for your service to our great country.  And for those of you who are / were Marines, happy birthday to the Marine Corps on Friday.

^{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.}