Qtrade Direct Investing

Weekly Market Pulse - Week ending February 17, 2023

Market developments

Equities: The U.S. market ended the week lower as higher than expected inflation data led to hawkish comments by Federal Reserve officials. The S&P 500 was down ~-0.3% after falling as much as 1% but was then lifted by consumer staples and utility stocks. The Nasdaq finished the week +0.4% as tech continues its strong year even as interest rates rise. Investors are closely watching the Fed comments on rates and are now estimating a ~5.3% peak rate later this year, compared to 4.9% two weeks ago.  

Fixed income: The U.S.10yr finished the week up 8bps to 3.81% as investors now expect interest rates to have a higher peak and stay higher for longer. We heard from Fed Reserve Bank of Cleveland President Loretta Mester who said she saw a compelling case for another 50bps hike and James Bullard said he would not rule out supporting a 50bps hike in March. It’s been a difficult couple of weeks for Fixed Income investors as high inflation and a strong labour market are forcing a more hawkish view from the Fed.   

Commodities: Oil fell this week, down -4.3% to $76.32 as hawkish signals from the Feb added to concerns of supply chain build up. Crude has had a volatile start to the year as the positive tailwind of China’s reopening is battling against the US economy that may potentially enter a recession.  

Performance (price return)

Performance table

  As of February 17, 2023

Macro developments

Canada – No notable releases

No notable releases this week

U.S. – CPI came in above market expectations at 6.5%, PPI increased more than expected and retail sales jumped 3% MoM

U.S. CPI slowed to 6.4% in January, down from 6.5% in December but ahead of market expectations of 6.2%. This was the lowest reading since October 2021, with food cost up 10.1% and energy up 8.7%. Although we are seeing signs of inflation slowing, we’re still well above the Fed’s target of 2%. PPI for final demand increased 0.7% MoM in January, the most in seven months and above market forecasts of 0.4%.

Retail sales jumped 3% MoM in January, the largest increase since March 2021 and well above the market forecasts of 1.8%. The biggest increases were seen in sales at department stores, food services & drinking places and motor vehicles and parts. The data shows that the U.S. consumer has been resilient as a strong labour market and wage growth have helped consumers overcome higher prices..

International – Eurozone GDP expanded by 0.1%, U.K inflation fell to 10.1% in January, Japan’s economy expanded by 0.2% in Q4

Eurozone quarterly GDP expanded by a 0.1% in the fourth quarter of 2022, down from the 0.3% expansion in Q3. They did avoid a contraction at the end of the year, even as inflation and rising borrowing costs impacted domestic demand. On an annual basis, growth slowed to 1.9% during the fourth quarter, the lowest level of expansion since 2020/2021.

U.K inflation fell to 10.1% in January, down from 10.5% a month ago and below market expectations of 10.3%. this the third consecutive month where inflation fell, and January was the lowest number since September 2022. On an annual basis CPI fell 0.6%, the first decline in a year and the biggest since January 2019.

Japan grew by 0.2% QoQ in the fourth quarter of 2022, reversing from the -0.3% we saw in the third quarter, but fell short of market expectations of +0.5%. Private consumption picked up, even as headwinds from higher living costs persisted. For the full year, the economy grew by 1.1% in 2022, slowing from 2.1% in 2021. 

Quick look ahead

Chart of upcoming dates

As of February 17, 2023

Aviso Wealth Inc. (“Aviso Wealth”) is the parent company of Credential Qtrade Securities Inc. Aviso Wealth is a wholly-owned subsidiary of Aviso Wealth Limited Partnership, which in turn is owned 50% by Desjardins Financial Holdings Inc. and 50% by a limited partnership owned by the five Provincial Credit Union Centrals and the CUMIS Group Limited.

Online brokerage services are offered through Qtrade Investor, a division of Credential Qtrade Securities Inc., a wholly owned subsidiary of Aviso Wealth Inc. and Member of the Canadian Investor Protection Fund.

Northwest & Ethical Investments L.P (“NEI” or “NEI Investments”) is a subsidiary of Aviso Wealth; and NEI Funds are related issuers of Credential Qtrade Securities Inc.

This material is for informational purposes only. While this material has been compiled from sources believed to be reliable, Qtrade Investor does not guarantee the accuracy, completeness, timeliness or reliability of this information. Information, figures and charts are summarized for illustrative purposes only and are subject to change without notice. All investments are subject to risk, including the possible loss of principal.