November 2023 Market Review

U.S. Treasury yields fell across the curve after seven months of rising. The 10-Year yield moved 58 basis points (bps) lower, marking the most significant monthly decline since December 2008. The curve began to invert again as new economic data pointed to slowing U.S. growth. Despite commentary from FOMC members insisting that it is premature to rule out future rate hikes, the market entrenched expectations that the Fed will remain on hold for the remainder of the rate cycle.

The recently resolved union strikes muddied labor and manufacturing data; however, the trend was clear as weak payroll data kicked off a series of softening economic indicators reported throughout the month. As disposable income and excess savings have diminished, real wage growth remains elevated.

Inflation cooled further than anticipated, benefiting from lower energy prices. Core goods and shelter price growth continued to moderate in October. Breakevens on inflation protected securities narrowed in November. Inflation expectations shifted 25 bps lower, indicating investors expect the Fed will succeed in reaching its inflation target.

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