Inflation, Yields, and Portfolio Moves

November 20, 2023 Update

Here is my quick update for the week.

The most important news from last week was the better-than-expected inflation number that came at 3.2% instead of 3.3% expected.

I have been pointing out how inflation expectations play a big role in moving expectations about what the monetary policy could be. Also, inflation impacts short and long-term rates.

Let’s start looking at the 10-year treasury yield that keeps declining. See below.

If energy prices stay moderate, then inflation can keep its pace towards the 2% target from the FED.

In an environment where it looks more likely that the FED is done with rate hikes, the market responded well with another positive week. See below the equal-weight SP500: