Last week the bulls finally showed up! Despite concerns about inflation and potential rate hikes by the Fed, the stock market managed to break its losing streak.

What sparked the buying? Technical buying interest and a drop in market rates towards the end of the week supported an upside bias, and it seems there was also a feeling that the market was oversold on a short-term basis, which could have contributed to the gains.

Prior to Monday’s session, the S&P 500 had seen a 5.0% decline since February 2, so this is definitely a welcome change.

The Treasury market certainly had a reaction to all this news, with the 10-yr note yield surging past 4.00% before eventually settling at 3.96% by Friday’s close. But despite rising market rates, the main indices held up well thanks to some technical support.

From a technical standpoint, buyers stepped in when the S&P 500 breached its 200-day moving average, and by Friday’s close, the index had comfortably surpassed its 50-day moving average. (I am still very bearish about the market overall.)

Most of the S&P 500 sectors experienced gains this week, with materials, communication services, and industrials leading the way.

So all in all, it was a pretty eventful week in the stock market, and we’ll definitely be keeping a close eye on what happens next!

Truflation Shows Huge Drop In Inflation

Last Week’s Economic Reports

• Data releases throughout the week added to inflation worries, with the February ISM Manufacturing Index, weekly initial jobless claims, and revised Q4 productivity all contributing.
• Despite weekly jobless claims remaining low and reflecting a tight labor market, Q4 unit labor costs rose 6.3% from the same quarter last year, signaling wage-based inflation.
• The Prices Index in the ISM Manufacturing Index also increased, marking the first price rise in four months.
• And let’s not forget Germany’s higher-than-expected February CPI reading, which also contributed to inflation concerns.
• It’s worth noting that the materials and industrials sectors may have been boosted by China’s stronger-than-expected Manufacturing PMI and Non-Manufacturing readings for February.

CALENDAR & EVENTS

• Monday, February 27: Durable Goods Orders (MoM) (January)
• Wednesday, March 1: ISM Manufacturing PMI (February)
• Earnings
• Debt Ceiling Fight
• US-China Trade War

There’s a lot to look forward to, but Fed chairman Jerome Powell’s semi-annual Senate Banking Committee testimony on Tuesday has everyone buzzing. The next day, he’ll address the House of Representatives, but we should expect a similar speech. Keep a look out for how he addresses inflation and rate hikes!

This week’s US labor market surveys include four. Wednesday’s ADP and JOLTS surveys, Thursday’s Challenger survey, and Friday’s February employment statistics are scheduled. Remember the Fed is watching unemployment numbers, so a higher unemployment number could spark speculation of a dovish Fed.

Christine Lagarde will speak in Geneva on Wednesday. She always has insightful things to say about the European economy, so this is exciting. On Thursday night, the Bank of Japan will make its final Kuroda-era monetary policy decision. Japan’s economic plans will be intriguing.

Finally, China will set 2023 growth targets on Monday. This will help us predict China’s economy in the future.

Earnings

Monday: AeroVironment (AVAV) and Ciena (CIEN)

Tuesday: Casey’s General Stores (CASY) and Squarespace (SQSP)

Wednesday: Brown-Forman (BF.A) and Campbell Soup (CPB)

Thursday: BJ’s Wholesale Club (BJ) and Oracle (ORCL)

Friday: Westshore Terminals (WTE.TO) and Buckle (BKE)

Dividend Spotlight

Here’s a quick rundown of who’s planning to increase their payouts:

• Oracle (ORCL) plans to raise its payout from $0.32 to $0.38
• DICK’S Sporting Goods (DKS) is set to increase its payout from $0.4875 to $0.5375
• Qualcomm (NASDAQ: QCOM) plans to raise its payout from $0.75 to $0.81
• General Dynamics (GD) is set to increase its payout from $1.26 to $1.36
• And finally, American Tower (NYSE: AMT) plans to increase its payout from $1.56 to $1.58

BONDS

We’ve got some interesting updates from the finance world! U.S. rates have been on the rise for the fourth week in a row and even got close to 4.10% before easing up a bit. It’ll be really interesting to see what happens next week as economists await more clues about the job market.

As you might remember, February’s bullish rally began on the heels of some great nonfarm payroll data, but now the question is whether February’s data was just a fluke or a real indicator of the U.S. labor market’s strength. If it’s the latter, it could increase pressure on the Fed to maintain its hawkish stance.

Over in Europe, the latest macroeconomic data show that inflation is still on the rise, which means the ECB will have to try to contain it with further increases in its main policy rate. We’ll be keeping a close eye on the intermediate resistance level of 2.80% before it potentially hits 3.01%.

COMMODITIES

OIL & ENERGY

Oil inventories in the United States have risen for the tenth week in a row, which tends to penalize the WTI against Brent. Currently, the two benchmarks are trading at $76.80 and $83.5 respectively, which means that the spread between them is widening.

On the other hand, the weakness of WTI is actually fueling an acceleration of U.S. oil exports, which the U.S. Energy Agency (EIA) revealed in its latest report to be at 5.6 million barrels per day. Over in Europe, natural gas continues to decline, which is great news for European consumers as the Dutch benchmark is at €45/MWh.

PRECIOUS METALS & GOLD

In the world of industrial metals, it’s been a bit of a rollercoaster ride this week. While good economic statistics out of Beijing give cause for optimism about China’s ability to emerge from its torpor, investors are still opting for caution in the short term as they await the conclusions of the next annual meeting of the Chinese parliament.

Currently, copper is trading at around $8950 on the London Metal Exchange. In precious metals, gold rebounded strongly to $1850 as bond yields eased.

CRYPTOCURRENCY

Bitcoin is facing some tough times lately, with a growing regulatory crackdown in the US and less than optimal macro conditions for risky assets. As a result, the crypto-asset market leader is letting go of 5% of its capitalization this week and is currently flirting with $22,000. It’s definitely a challenging time for bitcoin, and without any strong positive catalysts, it and the crypto-currency market as a whole may still struggle to regain the hearts and confidence of investors.