Media Room
The week in the markets -
January 13, 2023
Share this
Holy spiralling prices!
“Of what use is a dream if not a blueprint for courageous action.”
– Adam West, as Batman
The most recent inflation data came in this week, showing the U.S. Consumer Price index (CPI) falling by 0.1% from November to December 2022, which met analyst expectations. Inflation continues to fall since peaking last year, with the rate of change slowing to 6.5% for headline CPI. Core CPI (which excludes food and energy items), came in at 5.7% year-over-year, rising by 0.3% over the previous month.
Part of that decrease in inflation was due to gasoline prices dropping by 9.4% for the month in the U.S. (and prices continue to moderate into 2023). On the other hand, shelter costs are still on the rise, according to Owners’ Equivalent Rent data, along with housing demand. Housing accounts for one-third of the CPI index. Put it all together, with lower housing starts and less money spent on gas (and other areas of consumer spending) we have lower inflation than the year before. We expect headline inflation to continue to drop in the months ahead in many areas. For example, the used vehicle sector bubble seems to have finally burst, with prices now down 8.8% year-over-year.
While this trend is favourable, we can’t expect ongoing factors to keep bringing inflation down (such as we’ve seen with gasoline prices). The Federal Reserve continues to insist that inflation is still far off its 2% goal. The data suggests we can expect the Fed to increase interest rates at the next meeting (and the bond market has already priced in a 25-basis-points increase).
U.S. politics continue to be unstable, with new House Speaker McCarthy facing two hostile fronts: his Democrat adversaries and the hardliners in his own party. While political influence on the markets is often overstated, this drama is a new source of potential risk. In the next few months, it will be interesting to see if U.S. Congress can agree to extend the debt ceiling without it leading to another standoff.
This week, we entered the earnings season for Q4 2022, starting off with many large U.S. banks. Interest income has risen, due to higher rates charged to customers, but banks typically take a cautious stance and may mute earnings with loan loss provisions, in preparation for a more widespread recession. We’ll see how the markets react, since financial institutions hold reliable and timely data about consumer behaviour. One thing’s for sure; we’re heading into a period of lower economic activity in manufacturing, earnings and imports.
This week's market closing value - week ending January 13, 2023
(As of 4:00 PM ET.*)
| EQUITY INDICES | Level | Change | 1-week | YTD | 1-year | 5-year |
| CAD | CAD | CAD | CAD | |||
| S&P/TSX | 20,370.41 | 564.73 | 2.85% | 5.16% | -4.33% | 4.55% |
| S&P 500 | 3,998.21 | 97.55 | 2.10% | 3.39% | -8.19% | 9.06% |
| DJIA | 34,302.61 | 672.00 | 1.60% | 2.38% | 1.62% | 7.40% |
| FTSE 100 | 7,844.07 | 144.58 | 2.64% | 5.36% | -0.98% | -0.70% |
| CAC 40 | 7,023.50 | 162.55 | 3.75% | 8.58% | -1.34% | 3.97% |
| DAX | 15,086.52 | 476.50 | 4.66% | 8.44% | -4.81% | 1.68% |
| Nikkei | 26,119.52 | 145.67 | 3.46% | 1.64% | -12.43% | 0.61% |
| Hang Seng | 21,738.66 | 747.02 | 3.11% | 8.68% | -5.06% | -5.71% |
| CURRENCY RETURNS | CAD | Change | 1-week | YTD | 1-year | 5-year |
|---|---|---|---|---|---|---|
| USD | 1.3395 | -0.0052 | -0.39% | -1.06% | 6.99% | 1.46% |
| Euro | 1.4507 | 0.0193 | 1.35% | 0.08% | 1.15% | -0.93% |
| Yen | 0.0105 | 0.0003 | 2.89% | 1.54% | -4.48% | -1.37% |
| CANADIAN TREASURIES | Yield | Change | COMMODITIES | USD | Change |
|---|---|---|---|---|---|
| 3-month | 4.33 | 0.08 | Oil | $79.98 | $6.32 |
| 5-year | 3.01 | -0.23 | Gold | $1,920.03 | $53.42 |
| 10-year | 2.89 | -0.20 | Natural Gas | $3.47 | -$0.27 |
| CANADIAN PRIME RATE |
|---|
| 6.45% |
*The data contained in the charts above is provided by Bloomberg as of 4:00 PM ET. Please note that the final closing market values may vary due to data delays and market settlement.
This commentary is published by IG Wealth Management and is provided as a general source of information. It is not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice or as an endorsement of any investment. Some of the securities mentioned may be owned by IG Wealth Management or its mutual funds, or by portfolios managed by our external advisors. Every effort has been made to ensure that the material contained in the commentary is accurate at the time of publication, however, IG Wealth Management cannot guarantee the accuracy or the completeness of such material and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein. Investment products and services are offered through Investors Group Financial Services Inc. (in Québec, a Financial Services firm) and Investors Group Securities Inc. (in Québec, a firm in Financial Planning). Investors Group Securities Inc. is a member of the Canadian Investor Protection Fund. Commissions, fees and expenses may be associated with mutual fund investments. Read the prospectus before investing. Mutual funds are not guaranteed, values change frequently and past performance may not be repeated.
This document may include forward-looking statements based on certain assumptions and reflect current expectations. Forward-looking statements are not guarantees of future performance and risks and uncertainties often cause actual results to differ materially from forward-looking information or expectations. Some of these risks are changes to or volatility in the economy, politics, securities markets, interest rates, currency exchange rates, business competition, capital markets, technology, laws, or when catastrophic events occur. Do not place undue reliance on forward-looking information. In addition, any statement about companies is not an endorsement or recommendation to buy or sell any security.
Trademarks, including IG Wealth Management, are owned by IGM Financial Inc. and licensed to its subsidiary corporations.
© Copyright 2023 Investors Group Inc. Reproduction or distribution of this commentary in any manner without the express written consent of IG Wealth Management is strictly prohibited. Please read Conditions of Use for more information concerning authorized uses of this document.
