When it comes to your money, it's really all personal.
Also, this week consumers continued to demonstrate their resilience as retail sales for July were much more substantial than anticipated. For economists forecasting a recession, consumer strength has been confounding. This is due to evaporating excess savings from pandemic-related relief programs and the upcoming end of the moratorium on
student loan repayments.
Another reflection of consumer confidence was the latest report on housing starts which rebounded from a decline in June to an increase of 3.9% for July. Building permits held steady in July, virtually unchanged from the level seen in June.
Two other indicators released this week showed better-than-expected results. Industrial production +1.0% and manufacturing production +0.5% were both higher than expected.
Fixed income was impacted by numerous factors this week, leading to a negative return of 0.6% for the period. Driving the negative return was an increase in interest rates as evidenced by the yield on the 10-year U.S. Treasury issue that ended the week at 4.25%. This is the highest yield for the 10-year since 2008.
Included in the factors impacting bonds were the waning expectations of an imminent recession, a heavy issuance calendar of Treasury security sales, and the Federal Reserve governor’s comments indicating that they may execute additional Fed Funds Rate increases.
Equity investors also experienced a negative return for the week. For U.S. investors, equities, as measured by the Russell 3000 Index, had a return of -2.2% for the week. And both market growth and value segments had negative returns exceeding 2.0%. Small cap stocks fared even worse for the week as the Russell 2000 Index declined
by 3.8%. International equities as measured by the MSCI EAFE Index also declined, returning -1.4%. The decline in equities is not unexpected given the extraordinarily robust performance they have delivered year-to-date.