• Global equities gained 2.0% last week.  U.S. stocks rose 1.6%, while developed international and emerging market stocks rose 2.7%, and 3.4%, respectively.  Over the last twelve months, global equities declined 15.5% with domestics (-15.3%), developed international (-11.7%) and emerging markets (-16.4%).  Bonds rose 1.2% for the week, down 7.2% over the last twelve months.  The U.S. 10-yr Treasury yield fell 31 bps to 3.56%.
  • Stocks and bonds started 2023 on a positive note.  The S&P 500 snapped a three-week losing streak, rising about 1.5%, while falling yields drove bond prices more than 1% higher.  Most of the upside came on Friday following the December jobs report which highlighted solid payroll additions, but more importantly, a slowdown in wage growth.  The report, which showed stronger than expected job growth (+223K vs +203K expected) and unemployment of just 3.5%, also eased investors’ inflation worries as labor force participation increased and wages grew more slowly than expected – potentially an early indication that the persistent imbalance between supply and demand for labor is beginning to unwind.  Earlier in the week, investors were less enthused by minutes from the December FOMC meeting which reiterated policymaker’s commitment to keep interest rates high to limit inflation.  Officials cautioned that restoring price stability could be complicated by “an unwarranted easing in financial conditions.”
  • Fourth quarter earnings season kicks off in the week ahead with a number of bellwether financials set to report.  From an economic perspective, the week brings Consumer Price Index (CPI; inflation data) for December.  Forecasts call for price increases of 6.5% compared to a year earlier – down from 7.1% last month.