Stocks edged higher this week as investors were encouraged by strong corporate earnings while keeping an eye on inflation and economic growth. The economic recovery has been challenged by price pressures, rising energy costs, global supply-chain bottlenecks, and an impending reduction in central bank support.  After dropping 4.8% in September, the S&P 500 has added about 5% so far in October. International developed markets have tacked on about 3% so far this month and emerging markets have gained about 3.5%.  Interest rates have been moving higher since last month’s Federal Reserve meeting, as expectations of Fed tapering of asset purchases are now expected to begin as early as next month. Higher yields have put downward pressure on total returns in the bond market, with the yield on the 10-year Treasury note trading around 1.64% after beginning the month around 1.45%. On the economic front, housing starts and permits came in lighter than expected Tuesday. For the rest of the week, economic data will be relatively light with existing home sales and jobless claims on Thursday. In the cryptocurrency space, Bitcoin continued to climb for the fourth consecutive week to more than $66,000 amid positive regulatory developments and the launch of the first Bitcoin-linked ETF, which began trading on Tuesday (ProShares).

Source: GSAM, Daily Upside, JPM, Factor Investor

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