Mid-Week Market Minute 03.23.22

Market Updates

Global stocks moved higher in early trading this week as investors continue to take cues from the Federal Reserve while keeping a close watch on developments in Eastern Europe. As anticipated, the Fed hiked interest rates last week for the first time since 2018 and pointed toward further quarter-point rate hikes in each of the six remaining meetings for 2022. In a speech on Monday, Fed Chair Jerome Powell reiterated the promise to take tough action on inflation, noting it may be appropriate to move more aggressively by raising rates by more than 25 basis points at upcoming meetings. Interest rates responded to these comments, with the yield on the 2-year and 10-year Treasury notes now trading around 2.14% and 2.37%, respectively. For reference, the 2-year and 10-year began the month of March at yields of 1.43% and 1.84%. In addition, futures markets are now pricing in about nine total rate hikes for the year, with the ending short-rate expected to land around 2.25%-2.50% by the end of 2022.  On the data front, sales of new single-family homes decreased by 2.0% in February to a seasonally adjusted annualized rate of 772,000 units. The level of sales in January was revised down to 788,000 from 801,000, indicating higher mortgage rates may be starting to slow demand in the robust U.S. housing market. Later this week, investors will keep an eye on jobless claims and durable goods orders due Thursday, along with pending home sales on Friday.

Source: GSAM, Daily Upside, JPM, FactSet

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