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WEEKLY SUMMARY: Gold’s best month this century, but Warsh spoils party
This S&P 500 index advanced over the week, topping 7,000 but ultimately retreating from its new intraday high. Large-cap value stocks gained and outperformed their growth counterparts. Small-cap stocks lagged and finished the week lower. Within the S&P 500, the communication services and energy sectors led the way. Health care stocks pulled back the most. Initial U.S. jobless claims came in at 209,000 for the week ended January 24—above the consensus estimate. After three consecutive rate cuts, the Federal Reserve left the benchmark fed funds rate unchanged, in line with market expectations. A 10–2 vote underpinned the decision, with the two dissenting policymakers favoring a 25-basis-point reduction. On Friday, President Trump announced that he had nominated Kevin Warsh, a former Fed governor, to head the U.S. central bank. If confirmed by the Senate, Warsh would succeed Chair Powell when the latter’s term expires in May. US Treasury yields were all higher on the month with the long-end outperforming (and the belly lagging). The dollar was dumped for the 3rd straight month trading to its weakest since July 2022 relative to its fiat peers – despite some strength at the end of the month. It was Gold's best month since 1999 but it ended with a $5 trillion loss in market cap in the last two days. Silver crashed a stunning 39% from Thursday's highs - entirely erasing its YTD gain. Crypto was down for the fourth month in a row in January.
Have a great week-end
Charles & Syz Research Lab
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Most major U.S. stock indexes closed the holiday-shortened week higher, with sentiment broadly supported by news that the U.S. and Iran had signed a memorandum of understanding, clearing the path toward reopening the Strait of Hormuz and helping push oil prices lower (worst week in 2 months). Of the major US equities indexes, the Nasdaq Composite performed best, advancing 2.4%, followed by the Russell 2000 and S&P 500, which added 1.2% and 0.9%, respectively. U.S. markets were closed on Friday in observance of the Juneteenth holiday. The Federal Reserve left the federal funds rate target range unchanged at 3.50% to 3.75% on Wednesday, as widely expected. However, the central bank’s updated Summary of Economic Projections and Chair Kevin Warsh’s first post-meeting press conference were largely interpreted as leaning hawkish, triggering a sell-off in stocks and a rise in short-term Treasury yields on Wednesday afternoon.