Weekly Investment Update

US equity markets, as measured by the S&P 500 index, continued to push into record territory last week, with Friday’s index close above 3,500, which equates to a 10% year-to-date total return[1].  Likely the biggest catalyst for last week’s 3% gain was the Federal Reserve’s announcement that it is updating how it manages inflation.  Federal Reserve Chair, Jerome Powell, confirmed Thursday in a press conference that the Fed will move toward an approach of “average inflation targeting”, which will permit the group to allow inflation to run “moderately” above target “for some time”[2].  The key implication for market participants is that low and accommodative interest rate policy from the Fed will be the norm for longer than otherwise expected.  The news was not so positive for fixed income investors as long-term Treasury bond prices declined.

This week, investors will be closely tracking the US labor economy when initial claims for unemployment insurance benefits and continuing jobless claims are announced Thursday, and the August employment report, which includes the unemployment rate, will be released Friday.  Despite many parts of the US equity market climbing back to new highs, the US employment picture is still challenged.  It may be important to see continued improvement in Thursday and Friday’s data to support equity markets at their current levels.  Last week, more than 1 million people filed for initial unemployment benefits, which has occurred every week but one since late March, and more than 14 million people filed continuing claims.

 

Source: St. Louis Federal Reserve

 

Key Economic Releases This Week

Source: MarketWatch

Asset Class Returns

Source: Morningstar
As of August 28, 2020

Prices & Interest Rates

Source: Bloomberg, US Treasury
As of August 28, 2020

[1] Source:  Morningstar

[2] https://www.cnbc.com/2020/08/27/powell-announces-new-fed-approach-to-inflation-that-could-keep-rates-lower-for-longer.html

Past performance may not be representative of future results.  All investments are subject to loss.  Forecasts regarding the market or economy are subject to a wide range of possible outcomes.  The views presented in this market update may prove to be inaccurate for a variety of factors.  These views are as of the date listed above and are subject to change based on changes in fundamental economic or market-related data.  Please contact your Financial Advisor in order to complete an updated risk assessment to ensure that your investment allocation is appropriate.   

Copyright © 2020 OneAscent Wealth