November 2023 Economic Outlook | IN, MI Trust Resources

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 market^1,3. 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)

Unemployment

Consumer Price Index (CPI)

Fed Policy

Interest Rates

Dollar Strength

Market Valuations

= Positive Indicator

= Neutral Indicator

= Negative Indicator

External sources: Refinitiv data¹, CNBC.com², 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.

Investment Commentary & Economic Outlook

November 1, 2023