Q3 2023 Market & Economic Review

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Q3: Equities decline, interest rates continue their rise

  • S&P 500 -3.3%; Bloomberg Agg Bond -3.2% for the quarter.
  • The entire yield curve shifted up during the quarter:
    • 5-yr Treasury 4.1% ➤ 4.6%
    • 10-yr Treasury 3.8% ➤ 4.6%
  • Oil increased from $70 to $91 per barrel.
  • Q3 earnings and revenue expected to be flat year over year.
  • Equity market continues to struggle with the tug of war between higher interest rates, contracting valuations, and whether earnings growth will meet robust expectations of 12% earnings growth next year.
  • Anecdotal evidence that consumer spending is slowing and weakening:
    • One of the nation’s largest used car dealer networks recently reported a 9% year over year decline in vehicle sales volume.
    • Financial institutions are increasing loan write-offs.
  • Investment grade bond yields breaking into the 6% range in some industries.
  • The best bond yields we have seen for the past 20 years

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