November proved to be an exceptional month for both stocks (the best in 4 decades!) and bonds with the expectation that the Federal Reserve is nearing the end of its interest rate hiking cycle and December is continuing that positive market trend. The S&P 500 is on track to increase for 7 straight weeks.
Among sectors in the S&P500 communication services and consumer discretionary rose more than 1% each last week, with technology, industrials and health care also notching gains. Energy posted the steepest decline at 3.3%, while materials, consumer staples, real estate, utilities and financials also closed lower.
More economic data seems to point towards a soft landing for the U.S. economy, including higher-than-expected U.S. Q3 GDP growth and a further drop in inflation, although nothing is for certain. There are still many pundits who believe a recession will occur.
Canada’s S&P/TSX Composite Index was 7.2% higher in November, as all of its underlying sectors were positive during the month. The information technology sector was the largest contributor to the index return, with a rise of 27.3% in November. The financials, real estate and telecommunication services sectors also rose by 9.8%, 7.8% and 7.1%, respectively.
For bonds, Canadian investment grade bonds, as measured by the FTSE Canada Universe Bond Index, rose 4.3% during the month, while the key global investment grade bond benchmark and global high-yield issues were up 5.0% and 4.8%, respectively.
Turning to commodities, natural gas prices fell 21.6% during the month, while the price of a barrel of crude oil fell 6.2%. Copper, silver and gold had a positive month, rising 4.9%, 10.2% and 2.2%, respectively.
Here are the YTD returns to Dec 13:
S&P 500 22.6%
TSX (Canada) 6.4%
One economist I admire is Frances Donald from Manulife. Here is a good article from her discussing their thoughts on recession on not.
Let me know if you have any questions.
Sources: Bloomberg, Y Charts and IA Private Wealth.
