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My view on what's going on in the financial markets and the global economy, and a few other things that might interest me from time to time.

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Week ended October 13, 2023: reality of war sets in

Updated: Oct 21, 2023


It was a strange week, or at least it started that way. I had thought Monday would bring a firm risk-off move in markets following the Hamas atrocities in Israel last weekend, but instead equity markets went on a tear for three straight days. Reality eventually set in on Thursday, with slightly worse-than-expected September inflation data. Then the University of Michigan survey released Friday morning showed a sharp downturn in US consumer confidence that caused equities to continue their slide, albeit US stocks somehow ended the week higher. The VIX also (finally) increased on Friday after being relatively stable most of the week.

US Treasury yields took on a life of their own, too, bouncing all over the place throughout the week. By mid-week, it looked like bonds were going to get smashed as yields skyrocketed, but this gave way to risk-off flows and a growing awareness that the US economy could be in more trouble than thought in the months ahead. This sent yields lower across the curve (in spite of slightly hotter-than-expected inflation data), more pronounced at the economy-sensitive intermediate and long end of the curve. Gold also experienced safe haven (in)flows, with the price up sharply on the week. The US Dollar was firm, and oil prices re-accelerated like a rocket, not unexpected given concerns about potential disruption in oil supplies should the volatile situation in the Middle East worsen and broaden. In spite of recent rhetoric about credit deterioration, corporate bond spreads tightened this week, deferring growing concerns about credit deterioration. Friday’s 3Q23 earnings results for the trifecta of JP Morgan Chase, Wells Fargo and Citibank were positive as all delivered earnings and segment results that were perhaps slightly better than expected, even though the outlooks expressed by management in each case were rather concerning.

One final point is that the US House of Representatives remains leaderless as the Republicans – even though they control the House – cannot agree on a new Speaker. This is Washington politics at its most dysfunctional, hard for me to swallow. I wrote about this topic earlier this week in an article you can find here: “Deficits spiral, Congress dysfunctional”.

Below is the summary for the week and YtD, with more detail in the section in “The Tables” section of the full weekly write-up in


Same old, same old for me, and I stick by my view that stocks have probably seen their best levels of the year. I suspect bonds will rally at some point, and I continue to believe that the 10-year UST yield will see 4.5% again before it sees 5.0%. Time will tell as sentiment regarding the direction of yields seems even more volatile than equity expectations. The unexpected Middle East situation accelerated the move into safe haven assets, but I believe the combination of caution from the reporting banks regarding the future and fading consumer confidence both illustrate where the US economy is heading, expressed in lower yields in the bond market during the second half of the week.


S&P 500 earnings are underway: good summaries for the week ended October 13, 2023 are available from #Refinitiv LSEG I/B/E/S (S&P 500 Earnings Scorecard) and #FactSet Earnings Insight

US PPI for September (here): slightly worse than expected

US CPI for September (here): also slightly worse than expected albeit not significantly enough it seemed to matter

University of Michigan consumer confidence (here): This was a big miss as expectations were that consumer confidence would weaken but not to the extent it did. Interestingly, inflationary expectations rose.

Minutes from last FOMC meeting (Sept 19-20) are here


Things to watch:

  • Uncertainty in the Middle East: direction of and contagion associated with the Israeli-Hamas conflict is uncertain

  • UAW strike in the US: volatile situation / ongoing

  • US government shutdown: 2023-24 budget discussions resolved for six weeks, but will be re-visited and must be resolved by Nov 17th

  • Student loans are out of forbearance with payments having re-started

  • Carryover themes: Higher oil prices, stronger US Dollar, China growth (signs property sector is worsening)

  • Corporate earnings for 3Q23 have started. Magnificent seven are as follows:

o Oct 18: TSLA

o Oct 24: GOOG, MSFT

o Oct 25: META

o Oct 26: AMZN

o Nov 2: AAPL

o Nov 21: NVDA

Upcoming central bank meetings:

ECB: Oct 26 and Dec 14

Federal Reserve (FOMC): Oct 31/Nov 1; Dec 12-13

Bank of Japan: Oct 30-31 and Dec 18-19

• Bank of England: Nov 2 and Dec 14


The tables below provide detail across various global and US equity indices, the US Treasury market, corporate bonds and various other asset classes.

Global equities

US equities

US Treasuries

Corporate bonds (credit)

Safe haven and other assets


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