Weekly Macro Minute

GuideStone Reflections

“For if you forgive others their offenses, your heavenly Father will forgive you as well. But if you don’t forgive others, your Father will not forgive your offenses.”

Matthew 6:14 – 15 (CSB)

At this point in his Sermon on the Mount, Jesus seems to be saying that the forgiveness we receive from God is conditional on the forgiveness we grant others. But if our God operates by grace, how can this be?

To understand this passage, we need to understand two biblical verbs: “forgive” and “repent.” The Greek word we translate as “forgive” is aphiemi, which means to release or send away. To forgive someone then is to release our right for recompense from them due to the injustice they inflicted on us.

The Greek word we translate as “repent” is metanoeo, whose root meaning is to have a change of mind. To repent then means that we have a change of mind about Christ. The Apostle Peter explained repentance by urging his listeners to “repent and turn back,” or change their minds by turning back to God (Acts 3:17). But of course, to have a change of mind means that one must first “release” or “send away” the old mind.

So, in both cases, to forgive or to repent means that we must first let go of something. To forgive someone means that we let go of our right to settle accounts with that person. To repent means that we let go of our sin. Jesus' point is that people who have trouble forgiving others of their sin usually have trouble repenting of their own. They are incapable of letting go of sin, whether it's their own or someone else's. They neither offer forgiveness nor ask for it.

So, if we’re struggling with granting forgiveness to someone, we may need to examine our willingness to repent.

In the Economy

The third quarter ended with a resounding thud last week, marked by several grim milestones. Over the past three months, markets finally came to grips with global central banks' unwavering resolve to continue raising interest rates. The S&P 500^® Index is now back at a level last seen in November 2020, with September being the worst month for the Index since March 2020. This was the third consecutive quarter in the red, a dubious streak not seen since 2009, and the first time since at least 1976 where both stocks and bonds produced losses three quarters in a row. Lastly, the S&P 500^® marked the first time in approximately 80 years that it posted a quarterly loss after seeing a rise of more than 10% over that same time frame. After this trying quarter, the S&P 500^® is now down almost 24% for the year. Meanwhile, international markets have fared even worse. While challenging to accept, the near certainty of additional market and economic pain is a needed byproduct to restore health to global economies wracked by unchecked inflation.

The U.S. had two major market-moving economic releases this past week. In the "good news is bad news camp," weekly jobless claims came in at a five-month low at 193,000, thus encouraging the Federal Reserve to continue its hawkish stance to slow the labor market. Friday brought the release of the core Personal Consumption Expenditures Price Index (PCE), the Fed's preferred inflation gauge, which showed a rise of 4.7% annualized in the second quarter, well above expectations and far north of the Fed's desired 2% level. Lastly, new home sales surprised investors by rising 29% to a five-month high while pending home sales fell slightly. The Case-Shiller Home Price Index fell in July, its first monthly decline since early 2012.

As is often the case, European stocks moved in tandem with their U.S. counterparts on the week and slipped across all major geographies. The U.K. remains the most headline-grabbing country as fiscal and monetary policies appear at odds with each other. The Bank of England surprised the world with a plan to purchase long-dated U.K. government bonds to stabilize the market for their sovereign debt. European Central Bank President Christine Lagarde stated that the outlook for the area is "darkening" and signaled more rate hikes are ahead as inflation in the eurozone skyrocketed to a record 10.1% in September, well above consensus forecasts.

Japan's stock market fell precipitously as the major gauges ticked down over 4.5% and ended at a 3-month low. The strong USD continues to weigh on sentiment, and China saw its markets generally decline by around 2%. The yuan is on track for its biggest annual loss since 1994. In a typical environment, a dollar this strong would have led to an interventionist speech from the Fed, but for now, its strength helps reduce imported inflation.

Across the Markets

• The 10-year U.S. Treasury yield briefly crossed the 4% level for the first time since 2008.
• The ongoing 2-year/10-year yield curve inversion remains at 44 basis points, slightly reduced from last week.
• 30-year mortgage rates meanwhile breached 7%.
• Oil oscillated but ended just under $80/bbl.
• The Atlanta Fed’s GDPNow model estimate for U.S. real GDP growth for the third quarter of 2022 saw a strong move up with an estimate of 2.4%, up from last week’s reading of 0.3% due to surprisingly significant revisions to Q2 GDP data on trade, inventories and personal consumption.