Market Update – November 2023

We provide regular market updates from Optimize Wealth Management. Here are the latest market headlines and market movements. If you have any questions, please don’t hesitate to contact us.

November 20 – A Week in Review

  • U.S. Inflation Comes in Below Expectations, Pushing Equities Higher: Both headline and core inflation came in below market expectations. This continued fueling a rally in equities and also resulted in a sharp pullback in longer-term treasury yields. On a twelve-month basis, core inflation is down 2.6 percentage points from last year’s high. 
  • The U.S. Producer Price Index for October showed a surprising decrease, signaling a broader easing of inflationary pressures: The U.S. headline Producer Price Index (PPI) for October brought another surprise when it decreased by 0.5% month-over-month, compared to an expected rise of 0.1%. Year over year, the increase was only 1.3%, significantly lower than the anticipated 1.9%, indicating a broader easing of inflationary pressures. 
  • Canadian Housing Continued to Cool: Home sales dropped 5.6% from September to October. This marked the fourth monthly contraction in a row, and sales were down in 9 of the 10 provinces, with New Brunswick being the sole exception.

The Week Ahead

  • Focus on October’s Canadian CPI: The main event will be the release of October’s Canadian consumer price index data on Tuesday. Policymakers will be keying in on core inflation, which is expected to show some modest cooling in year-on-year terms based on consensus estimates. 
  • October’s U.S. Durable Goods Orders: In the U.S. we will get a look at the release of durable goods orders for October. This will provide additional insight into the pace and path of inflation on a go-forward basis.
  • U.S. Flash PMI: This week will see the release of the U.S. Purchasing Managers’ Index (PMI), a crucial economic indicator providing a snapshot of the country’s manufacturing sector.

November 13 – A Week in Review

  • Powell Provides Commentary Following Strong Economic Data: Powell restated the Federal Reserve’s dedication to implementing additional measures to tighten monetary policy if deemed necessary. This statement follows the release of recent data indicating a notable improvement in credit conditions, coupled with a substantial decrease in the market’s anticipation of future interest rates, as compared to the Fed’s previous announcement.
  • Statistics Canada’s Report Shows Trade Surplus: Statistics Canada released data on merchandise trade, revealing a second consecutive month of trade surplus. This positive trend is indicative of a healthy sign for the overall economy.
  • Spending on Travel Continues to Show Resilience: TripAdvisor and Disney reported earnings results indicating robust and persistent spending in the travel and leisure sectors. In their most recent earning calls, both companies emphasized the strength of this segment in supporting their business.

The Week Ahead

  • U.S. Consumer and Producer Inflation Data: This Tuesday, we anticipate the release of highly awaited U.S. consumer inflation data, followed by producer inflation data scheduled for Wednesday.
  • Canadian Manufacturing Sales: This Wednesday, Canada will see the release of its manufacturing sales data, offering insights into the well-being of the nation’s industrial sector. The report will encompass data from the month of September.
  • Canadian Housing Starts Data: This Thursday, we are set to receive data on Canadian housing starts, a crucial indicator that will enhance our understanding of consumer risk appetite and the demand for housing.

November 7 – A Week in Review

  • Fed’s Interest Rate Pause Sparks Equity Market Surge: The spotlight was on the policy statement of the Federal Reserve, which, as predicted, maintained interest rates at 5.50%. Notably, this marks the first instance in the ongoing phase of tightening that the Fed has halted for two successive meetings, leading to positivity in the equity markets.
  • October Employment Data Supports Fed’s Decision: October’s employment figures exhibited a milder trend, reinforcing the Federal Reserve’s choice to suspend its rate hike and aligning closely with the Fed’s objective of alleviating labour market tension.
  • Canada’s October Jobs Surge Eases Inflation Concerns: In Canada, robust employment figures were observed, with the addition of more than 18,000 jobs in October. Nevertheless, the expansion of the labour force contributed to a minor easing of conditions, which is anticipated to alleviate inflationary pressures over the long term.

The Week Ahead

  • Anticipated Canadian Housing Data: This Wednesday, we anticipate the release of Canadian housing data. Given that housing is a significant contributor to inflation, this information will offer crucial insights into future inflation trends.
  • U.S. Labour Market Data: On Thursday, we are set to examine the U.S. labour market data, aiming to identify any indications of the Federal Reserve’s policy achieving its intended impact.
  • November Consumer Sentiment: The University of Michigan is scheduled to release its preliminary consumer sentiment survey this Friday. The report will analyze consumer confidence levels in various categories, such as the economy, personal finances, buying conditions, and more.   
  • Notable Earnings Reports: Earnings season is still in full swing, with UBS, Uber, and Disney reporting this week.