This Weekly Financial Markets Update reviews the top market headlines: Decline in Existing Home Sales Persists, Beige Book Highlights Weakening Demand, Investors Seek Refuge in Money Market Funds

Top Three Market Headlines

Decline in Existing Home Sales Persists: The National Association of Realtors reported last week that sales of existing homes dropped 1.5% in September from the previous month, the eighth consecutive monthly sales decline. The seasonally-adjusted annual rate (SAAR) of sales for the month was 4.71 million, down 27% from the pace of sales recorded in January of this year. Rising mortgage rates continue to depress demand for potential home buyers, as the national average 30-year fixed mortgage rate reached 6.94% last week, up from 3.11% at the start of the year, according to Freddie Mac.

Beige Book Highlights Weakening Demand: The Federal Reserve last week released its most recent Beige Book, a compilation of anecdotal information about current economic conditions collected eight times a year by the 12 Federal Reserve Districts. The report indicated that national economic activity expanded modestly over the period since the previous report in early September, though outlooks were more pessimistic on concerns about weakening demand. Half of the Districts reported that business activity was either flat or had declined since early September, pressured by higher interest rates, inflation, and supply disruptions. Labor market conditions remained tight, though several Districts reported a slowing in labor demand.

Investors Seek Refuge in Money Market Funds: The Investment Company Institute reported last week that nearly $140 billion has flowed into money market funds this year, including $36 billion in the past three weeks. The flight to safety comes amid sharp year-to-date declines in major stock indexes and on-going recession fears. In addition, more attractive yields are inviting greater flows, as the average money market fund yield has climbed to 2.77% from 0.02% at the start of the year, according to Crane Data. In another indication of investors' caution, a recent Bank of America survey showed that asset managers held 6.3% of their portfolios in cash in October, the highest level since April of 2001.

As of October 24, 2022 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 3.24% 3.04% -23.36% -21.91%
S&P 500 4.75%
4.75% -20.25% -16.23%
Russell 2000 3.57% 4.70% -21.58% -23.12%
MSCI EAFE 0.55% 1.12% -26.28% -25.91%
MSCI Emerging Markets 0.21% -1.19% -28.03% -31.19%
FTSE NAREIT 3.13% -0.91% -28.78% -22.70%
Bloomberg Commodity -2.04% 0.01% 13.58% 9.17%
Barclays U.S. Aggregate -1.07% -2.49% -16.74% -16.11%

WSJ 10/20/2022, Federal Reserve, 10/19/2022, Financial Times 10/20/2022, Freddie Mac 10/20/2022. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Gallagher Fiduciary Advisors, LLC ("GFA") is an SEC Registered Investment Adviser that provides retirement, investment advisory, discretionary/named and independent fiduciary services. GFA is a limited liability company with Gallagher Benefit Services, Inc. as its single member. GFA may pay referral fees or other remuneration to employees of AJG or its affiliates or to independent contractors; such payments do not change our fee. Securities may be offered through Triad Advisors, LLC ("Triad"), member FINRA/SIPC. Triad is separately owned and other entities and/or marketing names, products or services referenced here are independent of Triad. Neither Triad, Arthur J. Gallagher & Co., GFA, their affiliates nor representatives provide accounting, legal or tax advice.