Investment Commentary & Economic Outlook

November 1, 2023

Equity markets declined in October, as the S&P 500 was down -2.10%, US small caps -5.74%, US mid-caps -5.34%, international developed -4.31%, and emerging markets -4.02%1. The US Aggregate Bond Index declined -1.58% in October1.

The Israel-Hamas war has added to market volatility in October. The war has been a nightmare from a humanitarian perspective. At the same time, strictly as it pertains to the markets, we don’t think it will have a significant lasting impact on the global economy as the world’s largest economies are not directly involved. One concern among some investors has been the potential for the war to cause a surge in oil prices, yet WTI oil prices declined approximately -8.68% in October2.

As of 10/31/23, the S&P 500 returned -8.25% from it’s 2023 closing high price on 7/31/23; to put that into perspective, a 10% decline happens every year on aver-age including overall positive years in the market1,3. Thankfully, we reduced equity exposures on 8/2/23, near 2023 equity market highs, and put the proceeds into fixed income. We bought back some of the equity exposure for most client accounts on 9/26/23. The S&P 500 is down ~2.1% from those levels, and we will look to be buyers again on any meaningful declines from here. We believe equity markets will end the year higher than current prices.

The 10-year Treasury yield rose in October from 4.59% to 4.81%, causing Treasury bond prices to decline1. Inflation remains elevated as the Fed’s preferred measure, CORE Personal Consumption Expenditures (PCE), came in at 3.7% yoy, but the last three months were up only 2.5% on an annualized basis4. We expect fixed income markets to stabilize as inflation moderates. While fixed income has generally declined in varying degrees year-to-date, we have periodically reduced corporate fixed income exposures in favor of Treasury bond exposures (most recently on 9/26/23), which has served to reduce short-term declines.

Indicator Outlook
Gross Domestic Product (GDP) Neutral Indicator
Unemployment Positive Indicator
Consumer Price Index (CPI) Neutral Indicator
Fed Policy Negative Indicator
Interest Rates Neutral Indicator
Dollar Strength Neutral Indicator
Market Valuations Positive Indicator
Positive Indicator = Positive Indicator  Neutral Indicator = Neutral Indicator
Negative Indicator = Negative Indicator
External sources: Refinitiv data1,, S&P 500, Capital Group3, Bureau of Economic Analysis4
For more information about our investment philosophy, see MTC Wealth Management.
Non-deposit investment products available through Members Trust Company are not deposits of or guaranteed by the trust company, a credit union or credit union affiliate, are not insured or guaranteed by the NCUA, FDIC or any other governmental agency and are subject to investment risks including possible loss of  the principal amount invested. Members Trust Company, owned and managed by America’s credit unions, is a special purpose federal thrift regulated by the Office of the Comptroller of the Currency. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Past performance is not indicative of future results. This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant. Any opinions expressed are those of the presenter and do not necessarily reflect the position of Members Trust Company. The information above is obtained or compiled from sources we believe to be reliable. We Do Not Guarantee that such information, will be free from errors, omissions, whether human or mechanical, nor do we guarantee their timeliness, accuracy, or completeness.
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