Weekly insight into the marketplace.
Stock-market rallies fizzled out
Monday saw each of the major North American stock indexes snap multi-day win streaks, as comments by U.S. Federal Reserve officials seemed to
pour cold water on speculation that policymakers may be ready to decrease the size of interest-rate increases. Equity markets bounced back on
Tuesday, after the U.S. Bureau of Labor Statistics’ producer price index (PPI) for October – a key inflation measure at the wholesale level –
came in lower than expected, at 8% year over year. This fuelled investor hopes that inflation may be easing in the world’s largest economy.
Better-than-expected corporate-earnings reports from retail giants, such as Home Depot and Walmart, added to the positive sentiment. But
momentum faded mid-week, as a case of “good news is bad news” hit markets. U.S. Census Bureau data, released on Wednesday, showed that October
saw the biggest retail-sales increase in eight months; many investors suspected policymakers would interpret this as a sign that the economy can
tolerate higher rates for longer. Although equity markets staged a modest rebound on Friday, optimism was muted, given a steep inversion of the
U.S. Treasury yield curve – which, historically speaking, is a key indicator of a recession ahead.
Canadian inflation showed signs of cooling
On Wednesday, Statistics Canada reported that the nation’s annual inflation rate held steady in October. Data showed that the consumer price
index (CPI) rose 6.9% from a year ago, for the second-straight month. “After peaking in June, inflation decelerated and fell below forecasts for
October, as the Bank of Canada’s aggressive interest-rate hikes slowed the overheated economy,” according to the Co-operators Financial
Investment Services analyst team. “This potentially signals that only a handful of interest-rate hikes may be left, which could boost investor
confidence.” But the team also cautions: “historically, low unemployment has made inflation stickier than expected, suggesting it will take
longer to bring inflation back to the target band, and reinforcing the bank’s current ’higher for longer’ stance.”
Oil prices declined, despite geopolitical flare-ups
It was another losing week for crude. Mid-week price jolts came and went over geopolitical concerns that included a fatal missile explosion in
Poland, and a drone attack on an Israeli oil tanker near the Omani coast. The tone was set on Monday, when the Organization of Petroleum
Exporting Countries and its allies (OPEC+) announced that it had cut its global demand outlook for the second time in a month. It cited a
weakening global economy and China’s strict anti-COVID regulations. Aggressive central-bank policy and a strong U.S. dollar also added to
bearish market sentiment. By the end of the week, futures for benchmark West Texas Intermediate crude fell 10%, to nearly US$80 a barrel – the
lowest level seen since September.
The stock and bond market
Dow Jones Industrial Average
S&P 500 Index
10-year Canadian Bond Yield
year U S Treasury Yield
WTI Crude Oil
Bank of Canada Prime Rate 5.95%
*Weekly performance ending November 18, 2022. Source:
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Economic data: This week, energy-supply, housing and employment figures will provide investors with key readings on the
U.S. economy. Canadian housing reports, as well as wholesale, manufacturing and retail sales updates are also scheduled for release.
U.S. markets will be closed on Thursday (November 24) for Thanksgiving Day.
Circle these dates
Bank of Canada monetary-policy update
December 13 to 14
U.S. Federal Reserve meetings and statement
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