John Hancock: Weekly Market Recap Week Ended February 24th

Fed’s rate outlook

Although the U.S. Federal Reserve slowed the pace of interest-rate hikes at its most recent meeting on February 1, minutes from the session that were released on Wednesday showed that Fed officials believe “ongoing” rate hikes will continue to be necessary. They said they need to see further evidence of a broad easing in price pressures before they’ll be confident that inflation is “on a sustained downward path.

Inflation reversal

The U.S. Federal Reserve’s preferred gauge for tracking inflation rose 0.6% from December to January—the largest month-to-month increase since last June. The bigger-than-expected rise in the Personal Consumption Expenditures Price Index weighed on stocks Friday, as it puts more pressure on the Fed to continue lifting interest rates to try to control inflation.

Yield surge

Fresh worries about inflation and the course of further interest-rate hikes weighed on prices of government bonds, sending the yield of the 10-year U.S. Treasury bond to its highest level in three and half months. The yield rose on Friday to 3.94%, up from 3.83% at the end of the previous week. The 2-year note’s yield also jumped, climbing to 4.78%.

Q4 GDP revision

The U.S. economy grew at a slightly slower pace in the fourth quarter of 2022 than originally estimated, according to a revised government release on Thursday. GDP expanded at an annualized rate of 2.7% in the latest quarter, down from an initial 2.9% estimate released a month earlier. The downward revision was attributed in part to slower consumer spending than initial data had shown.

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