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In the week ending on November 3rd, equity markets rallied on signals from the Federal Reserve that the rate-hiking cycle might be at its end. Consumer confidence declined for the third straight month, despite other economic metrics showing a consumer that is still spending heavily.

This week marked a lower close for equities in the last full week of October, despite positive economic data and Q3 earnings growth. Third-quarter GDP exceeded expectations, primarily driven by increased consumer spending and government expenditures. September Durable Goods orders were strong, particularly in the transportation sector.

The Leading Economic Index raised ongoing economic concerns, while September Existing Home Sales declined from a year ago with a very modest gain in home prices. We also saw initial claims reach a 10-month low last week, underscoring the strength of the labor market.

In a week full of data, inflation continues to clock in above the Federal Reserve’s 2% target, with September’s CPI and PPI indexes both coming in hot this week. Earnings look to be faring well so far for the third quarter, with 5% of the S&P 500 having been reported at this time, largely beating estimates. In other news, consumer sentiment fell in October, as consumers note continually higher prices, like we saw in the CPI. Overall, the economy looks to be in a pivotal position, with higher rates, inflation, and geopolitical risk being in the forefront of investors’ minds.

The first week of October came full of economic data and movements in interest rates, as equities saw large swings but ultimately ended lower. As of close Thursday October 5th, the Nasdaq Composite fell -0.66%, the S&P 500 fell -0.7%, and the Dow Jones Industrial Average fell -0.94% for the week.

We closed out the month of September with a week for the bears, as we avoided a government shutdown and face the realities of a slowing economy. Consumers are feeling less confident in the economy, while new home sales came in slimmer than expected.

Other important economic data points provided mixed signals this week including bearish leading indicators, a slow existing home sales market, and strong labor data in initial claims. Overall, we remain partially bearish and partially bullish on this unique environment, as we see the end of the rate hiking cycle coming closer to an end.

Despite a variety of bearish inflationary data including CPI and PPI, we saw equity markets close higher for the week as of Thursday. Inflationary data rose more quickly than expected as energy prices weighed heavily on both consumers and producers in August.

Equity markets declined this week, with August’s ISM Services and Manufacturing Indexes coming in higher than a month ago. Initial jobless claims came in much lower than expected, and Apple faced challenges from Chinese iPhone restrictions on government workers. The upcoming September FOMC meeting is expected to maintain rates, but market sentiment could quickly shift with a surprise in August CPI data.

Currently, we are carefully observing the potential effects that these actions may exert on both markets and our portfolios. This vigilant monitoring will persist as the well-being of the banking system remains a critical component of the functionality of both the US and global economies.