Weekly Macro Minute

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GuideStone Reflections

Your arrogant heart has deceived you,

you who live in clefts of the rock

in your home on the heights,

who say to yourself,

“Who can bring me down to the ground?”

Obadiah 4, CSB

Israel and Edom were brother nations, descended from Abraham, but they had always had an antagonistic relationship that sometimes led to war. When Babylon invaded Judah, instead of coming to help their kin, the Edomites watched and rejoiced from their mountain stronghold (Petra in modern-day Jordan) as Jerusalem was razed to the ground. When the devastation was complete, they came down and looted the survivors. The prophet Obadiah had a stern warning for them. While they sat proudly in the citadel in the hills believing they were beyond harm, they were not beyond God.

As Obadiah warned, pride is deceiving. First, it tricks us into believing that we owe nothing to God. The Edomites stood proudly in their fortress stronghold, thinking they were invulnerable and in control of their world. But their vaunted strength was due to a natural formation that God created when he carved the mountains out of the earth. They didn’t build it. It was a providential gift from him. But pride deceives us into thinking that all that we have is the result of our hands. It misleads us into thinking that we are stronger, better and more in control than we are, and robs God of his glory.

Second, pride deceives us into thinking we owe no mercy to anyone. When you live by pride, you automatically assume that people get what they deserve – because that's what you believe about yourself. Your life is good because you earned it. Therefore, if someone’s life is not working well, then it must be because they did something to deserve it. Pride leads to indifference toward others, just like in the case of the Edomites.

James reminds us: Don’t be deceived, my dear brothers and sisters. Every good and perfect gift is from above (James 1:6 – 17, CSB). All that we enjoy or benefit from are gifts from God. Don’t be deceived by pride. Recognize that you are a recipient of God’s grace.

Across the Markets

Global stocks ended a volatile (and holiday-shortened) week slightly in the red (domestically, the S&P 500® was down 65 basis points from last week) as many world leaders and heads of business converged on Davos, Switzerland for the World Economic Forum. One could view this decline as a relative cooling down from the breakneck speed at which markets have accelerated year-to-date as investors digested a slew of reports from the thick of earnings season. A clear differentiator last week continued to be the divide between growth and value equities. Growth-oriented stocks logged a positive result, further pushing global growth outperformance for the year. Another hallmark of this year-to-date rally worth mentioning is its low-quality nature. Last year’s losers have been this year’s winners so far – a low bar considering 2022’s market performance. Euro-area stocks weakened as the European Central Bank affirmed its hawkish policy stance. Japan securities got a boost from a more dovish Bank of Japan outcome. At the same time, Chinese stocks continued rallying for a fourth consecutive week as reopening tailwinds abound, and the country reported a better-than-expected GDP print.

The U.S. dollar continued its decline last week as most market prognosticators remain bearish on the currency’s prospects over the near term. Oil traded up throughout the week to end at just under $82/bbl – roughly $10/bbl greater than where we started the year – with prospects for higher demand seemingly on the horizon, primarily predicated on China’s continued reopening.

Lastly, the U.S. 10-year Treasury yield rose about 11 basis points throughout the week to end at 3.48%. Notably, it hit its lowest intraday level in over four months mid-week. For context, the benchmark bond yield was roughly 40 basis points higher at the start of this year. The dip in yields correlates with mortgage rates and has caused a marginal increase in mortgage demand as a still-tight housing market persists.

 

 

 

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This information is prepared by GuideStone Capital Management, LLC®, a controlled affiliate of GuideStone Financial Resources®. This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. Diversification is not a guarantee against loss. This information does not represent any GuideStone® product. Special risks are inherent in international investing, including those related to currency fluctuations and foreign, political and economic events.

The material represented has been obtained from sources we consider reliable, but which we cannot guarantee. It is subject to change without notice and is not intended to influence your investment decisions. This information discusses general market activity, industry or sector trends or other broad-based economic, market or political conditions and should not be construed as research or investment advice.

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Past performance is no guarantee of future results.

The S&P 500® Index is a market capitalization-weighted equity index composed of approximately 500 U.S. companies representing all major industries. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of its constituents. “Standard & Poor’s®”, “S&P 500®”, “Standard & Poor’s 500” and “500” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by GuideStone.

The Bloomberg U.S. Treasury Index measures U.S. dollar-denominated, fixed-rate, nominal debt issued by the U.S. Treasury.