Weekly Macro Minute

GuideStone Reflections

We have two keywords to examine. The first word is “generous.” A dictionary definition of generous is to be liberal in giving to others. But generosity is a relative term, having more to do with the giver behind the gift than the amount itself. A $5 gift from one person may be miserly, but that same gift from another may be quite generous. This illustrates an essential aspect of generosity: your generosity is not measured by the size of your gift but by the size of the need you forego meeting for yourself to provide for someone else’s.

The second keyword is “enriched.” The one who is generous benefits as well and receives “water.” Remember, Solomon wrote to an agrarian society in which easy access to water was limited. For a man to be enriched and watered meant having an adequate supply for his family, crops, and livestock. Today, we might say that to be watered is to have the bills paid, plenty of food in the fridge and gas in the tank.

This proverb tells us a timeless truth: living a generous lifestyle results in our needs being met in abundance.

Practicing generosity means that we habitually seek ways to meet other people’s needs, even at the cost of meeting our own. God, in turn, reciprocates. As we allow Him to use us to provide for others, He will also provide for us. God is faithful to His people. And when we live generously, we proclaim our trust in His faithfulness.

Across the Markets

Global stocks ended in negative territory to the tune of approximately -0.50%, while the S&P 500® ended down roughly -0.25%. Value stocks held up much better than their growth counterparts globally, with U.S.-specific value names climbing into positive territory for the week.

Trading volume was light as earnings season wound down. Still, notable sector movement took place in health care (which experienced a strong move upward on mounting efficacy of diabetes drugs being able to treat obesity) and financial services (on the back of Moody’s lowering credit ratings for small- and mid-cap banks, as well as placing several larger institutions on watch).

WTI oil rallied for a seventh consecutive week – the first time since June 2022 – to end at just over $83/bbl, serving as an increasingly worrisome headwind for consumers that refuse to curb their spending. U.S. Treasury 10-year yields rose throughout the week to end at a year-to-date high of 4.15%, continuing an upward climb from the early April 2023 low of 3.29%.

European shares were down more than U.S. stocks as a shaky political and economic environment heavily weighed on sentiment. The European Central Bank released a policy bulletin and reiterated the highly uncertain economic and inflation outcomes. The rate-setting body’s tone raised investor expectations that a rate pause was likely in September.

Japanese stocks bucked the trend and rose materially for the week as several major companies provided a favorable outlook. Elsewhere in Asia, Chinese markets experienced a precipitous drop of approximately -3.0% for the week as consumer and producer prices fell in tandem for the first time since November 2020, underscoring weak demand.

In the Economy

Stocks jumped on Thursday after the release of the Labor Department’s Consumer Price Index (CPI) data, which showed that the measure rose by 0.2% in July, bringing its year-over-year increase to 3.2%, a tick below expectations. Notably, a sharp decline in airfare helped to offset continuing shelter cost increases.

The upward move for markets faded as enthusiasm for a minor decline in CPI data evaporated as investors turned their attention to what the Producer Price Index (PPI) release might hold. That caution proved warranted as the Friday PPI release revealed a 0.3% rise in July, slightly higher than the 0.2% forecasted and the largest increase since November 2022.

Fed speak was directionless as the previous weekend saw Fed Governor Michelle Bowman warn that further hikes might be needed, while New York Fed President John Williams suggested that hikes were nearing their end and alluded to cuts in 2024. Philadelphia Fed President Patrick Harker stated he was comfortable with the current rate level, as Richmond Fed President Thomas Barkin noted that he, too, favored a pause.