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September 16, 2023 Market Update

When the markets opened on Friday, U.S. stocks were on track to edge higher for the week.  However, losses deepened late on Friday causing almost all major U.S. equity indexes to end up in the red, except the Dow Jones, which closed the week with a modest gain.  The S&P 500 Index’s fractional weekly loss leaves the widely followed index at a middling level relative to its trading range over the summer as investors grapple with several high-stakes questions about how the remainder of 2023 will play out.

Arguably, the most pressing item now is the possibility of a U.S. government shutdown—again as the budget deadline approaches.  Disagreements within the Republican party weaken the chances to avoid the shutdown, which would likely begin on October 1.

Perhaps the sight of Congress in crisis is a factor for why the U.S. 10-year Treasury yield continues to trend higher – slightly above 4.3% as of close on Friday, on Wall Street, close to the highest level since 2007.  The inflation news this week may be a catalyst, too.

The latest consumer-price index data showed the key inflation gauge rising 0.6% in August from the prior month.  That is the fastest rise in the inflation rate in more than a year.  However, core prices, which exclude food and energy prices, increased by a comparatively mild 0.3%.  Most observers believe that the latest inflation numbers were tame enough to convince Federal Reserve officials to refrain from raising rates yet again during their meeting next week.

Last week also saw the release of a report by the Congressional budget office that said the federal deficit grew by roughly $600 billion through the first 11 months of the current fiscal year.  Meanwhile, an agreement to fund the government next is needed by September 30, 2023, to avoid at least a partial shutdown of federal agencies, national parks, and other government functions.  At this point it seems likely that at least a temporary funding measure will be adopted before the deadline, but I can’t help but wonder how much longer Congress can put off dealing with an ever-growing deficit.

That’s all for now.  Have a great weekend and invest wisely my friends.