John Hancock: Weekly Market Recap Week Ended February 16

Inflation’s persistence

Stocks fell and bond yields rose on Tuesday after a monthly inflation report showed that U.S. consumer prices rose more than most economists had expected in January, with the Consumer Price Index’s annual rate coming in at 3.1%. A separate report on Friday reinforced the narrative of continuing inflationary pressures, as wholesale prices rose at the fastest pace in five months.

Shopping slowdown

U.S. consumers trimmed their spending more than expected after the holiday shopping season. In January, retail sales fell 0.8% on a seasonally adjusted basis compared with the previous month. In addition, sales figures for December and November were revised lower than the initially reported numbers.

Shifting rate outlook

The latest inflation data dampened investors’ expectations for any interest-rate cuts over the short term, and government bond yields rose for the second week in a row. The yield of the 10-year U.S. Treasury bond closed at 4.30% on Friday, up sharply from a recent intraday low of 3.82% on February 1.

Overseas recessions

Initial estimates from Japan and the United Kingdom indicated that their economies fell into recessions in late 2023, as they recorded negative growth for the second quarter in a row. In Japan, fourth-quarter GDP fell at an annual rate of 0.4%; in the U.K., the economy contracted 0.3%.

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