John Hancock: Weekly Market Recap Week Ended August 18

Yields spike

The latest U.S. Federal Reserve meeting minutes and fresh economic data bolstered expectations that interest rates are likely to remain high for longer than previously expected, and the yield of the 10-year U.S. Treasury bond on Thursday briefly eclipsed 4.32%, the highest since November 2007. Yields retreated somewhat on Friday, and the 10-year bond ended the week at around 4.25%.

Fed rate outlook

Minutes released on Wednesday from the U.S. Federal Reserve’s late July meeting showed that policymakers were divided over the need for further rate increases beyond the one approved at that meeting, with some citing the risk to the economy of pushing hikes too far. Others noted that inflation remains a primary focus, suggesting the potential for more rate hikes.

Retail resilience

The latest monthly U.S. retail sales report exceeded most economists’ expectations. The government reported that sales rose 0.7% in July relative to the previous month, topping consensus estimates of around 0.4%. Sales were up in 9 of 13 retail categories.

Fed’s summer agenda

Investors and economists will turn their attention to the Rocky Mountain town of Jackson Hole, Wyoming, where the U.S. Federal Reserve will hold its annual three-day economic policy symposium beginning Thursday, August 24. Fed Chair Jerome Powell is among the featured speakers.

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