Journey Strategic Wealth's December Commentary

“Cultivate the habit of being grateful for every good thing that comes to you, and to give thanks continuously.” —Ralph Waldo Emerson

asset class returns

There Is A Lot To Be Thankful For

In the middle of October, Fed Chairman Jerome Powell stated, “Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal.” I guess much has changed since then as just six weeks later the tone has altered significantly. “We’re getting what we wanted to get, we now have the ability to move carefully…we are well into restrictive territory,” suggesting that rates have peaked. Given the disruptions to the economy during the last few years of tight monetary policy, one might think that we got what we needed rather than what we wanted. The markets have taken a long and winding road but have reached the favorable destination of slow and steady economic growth, rising corporate profits, full employment, and moderating inflation.

The S&P 500 approached the levels last seen at the end of July, prior to the 3-month downturn from August to October. However, all major equity indexes had strong Novembers with International Equities, Emerging Market Equities, and Small Cap stocks, all returning 8-9%. Bond investors were also rewarded, as the benchmark 10-year Treasury yield, which touched 5% in October, fell 63 basis points to end November at 4.37%, its lowest yield since early September. The 2-year Treasury rate which seemingly topped out around Powell’s comments in mid-October settled in at 4.73%. Gold continued to climb, passing $2,000/oz, while Crude Oil prices softened, and the Dollar was steady at a three-month low.