Implications for your portfolios
In the wake of the Israel-Hamas conflict, crude oil experienced a significant upswing of 7.9%, while gold also gained traction, surging by 5.5%. These price increases were predominantly influenced by the geopolitical tensions in the region.
In the equities arena, the S&P 500 managed a modest 0.4% gain, offering some stability, while the Nasdaq faced a slight dip of 0.2%. Meanwhile, the Hang Seng Index witnessed a robust ascent of 1.9%, showcasing resilience in the face of global uncertainties.
After the inflation data report, the market’s pricing for a rate hike by the end of December increased modestly. However, the majority of traders still believe that the Fed will not proceed with another rate hike. As we have argued, with mortgage rates at 23-year highs and savings rates at relatively low levels, monetary policy appears restrictive enough. We advise investors to remain patient and adopt a dollar-cost averaging strategy during this volatile
Evaluating the Factors Behind the Inflation Trends The main drivers of last month’s inflation were higher housing costs, particularly in areas like Los Angeles. Rental prices and the cost of homeownership contributed significantly to the overall inflation index, accounting for more than two-thirds of the increase in core prices compared to a year ago.
The recent surge in hotel prices and airline fares also played a role. Gas prices remain significantly higher than pre-pandemic levels, impacting various industries and prompting some businesses to raise prices to compensate for rising costs.
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