Daily Market Color

Equities Rebounding from January Losses

Equities stage a comeback, rates steady across the curve. Equities have posted their best three-day rally in over a year as the S&P has recovered half of its losses from January. Markets have taken a breather on hawkish bets as Fed speakers this week have mentioned using the Fed’s balance sheet in tandem with rate hikes to control inflation. This has allowed investors to back off the idea that the Fed will be overly aggressive in rate hikes. The 10-year U.S. Treasury yield increased 1 bp on the day to close at 1.79%.

Supply chain shows slight improvement, manufacturer prices rise. The Institute for Supply Management (ISM) manufacturing index decreased slightly in January, but showed delivery delays fell to their lowest level in 14-months showing supply chain issues could be easing. Rising costs continue to add pressure on manufacturers with the prices paid index increasing in January after a couple months of decreases.

Inflation comes for monthly rents. Rents continue to rise throughout the U.S. as investors and landlords look to recoup rents that were lost during pandemic bargaining. Rising rents are expected to put pressure on inflation data in the near term as shelter costs comprise 32% of various consumer inflation indices. In 2021, shelter inflation was 4.0%, after averaging 3.3% in the previous five years.

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