Caution in the Markets
What is it?
Markets were mostly positive last week. However, investors are being cautious to start the shortened trading week after Juneteenth. A variety of investments performed well before losing steam going into the weekend.
Why does it matter?
The positive momentum has slowed down. Investors may be awaiting Fed Chair Jerome Powell’s comments throughout the week. Investors will look for any insight they can get into the Federal Reserve’s monetary policy. If markets remain strong this week they may be ready for a move higher. However, if the markets are more pessimistic by the end of the week, volatile investments could be at a greater risk of loss. We are managing each portfolio according to the possible opportunities and risks.
China Lowered Interest Rates
What is it?
The PBOC (People’s Bank of China) lowered interest rates for the first time in 10 months.** That was done after investors decided to put their money elsewhere in recent weeks. Chinese authorities attempted to bolster up a wounded economy.**
Why does it matter?
The markets didn’t respond very well. While lower interest rates help grow the economy, investors realize that rates are being lowered as the economy begins slowing down.** The investors are not jumping in to invest as if low rates instantly mean more profits. Investors are showing they do not favor China so much at the moment despite the minor move to encourage economic growth. It’s concerning that the Chinese economy may need a boost. That could be a signal of a more global slowdown. China and the U.S. are decoupling which could further impact the global economy as the economies are pushed to separate.
Other articles we found interesting this week:
Alibaba Names Tsai Chairman, Wu CEO in Surprise Shake-Up
Generative AI is ‘a job creator’ and will help avoid mediocrity
Current 401(k) portfolio
Our last 401(k) portfolio reallocation: 5/19/2022.
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The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
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Sources:
*Karen Friar. “Stocks fall as caution saps momentum” 6/20/2023. Yahoo Finance. https://finance.yahoo.com/news/stock-market-news-live-updates-today-june-20-2023-104226173.html
**Reuters. “China cuts lending benchmarks to revive slowing demand”. 6/19/2023. Reuters. https://www.reuters.com/world/china/china-cuts-lending-benchmarks-first-time-10-months-support-economy-2023-06-20/
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