Stock price action was unpromising through the first four days of the week. Prices sunk early, reached their lows by Tuesday afternoon, and chopped around over the two days. Then just as the market players were expecting the jobs report to fit the mood, they were stunned with a spike in new payrolls. In the September Non-farm Payroll was up 336,000 when the expected gain was around 170,000.
The high borrowing cost economy induced by the Fed has not been able to penetrate the jobs market yet. At first that feels like a sentence for borrowing costs to get even higher. But now the sellers who were spooked by recession fears have become buyers again. The jobs market is feeding the backbone of the U.S. economy, the consumer. As long as the consumer has money to spend and keep up with growing prices, the economy will expand.
This could be the soft landing that some have imagined. But the Fed must make a serious decision in the next Federal Open Markets Committee meeting. The committee has signaled to the public that it could raise rates again in one of the next two FOMC meetings. Could these strong jobs report be their case for an increase in rates for the November 1st meeting?
The market opened down Friday morning in its initial response the report. But after it settled in for moment, the buyers showed up and bought through the high and brought the C-fund out of negative territory for the week. The S-fund outperformed the TSP funds on Friday, but its deeper losses in the first part of the week kept its return to a 1.5% loss, but the fund was facing a loss of 2.7% for the week coming into Friday.
Bonds are sinking still. The F-fund fell deeper than the prior week, meaning the losses accelerated.
The TSP Talk AutoTracker was quiet in this first week of September. That was until Friday when a herd of members moved into stocks led by four of the best performing members of the community.
Get a chance to get updated daily on the action in the TSP Talk AutoTracker. For October we are giving out 5 free reports of the Last Look Report. Get your 5 free reports now and be caught up on TSP Talk AutoTracker IFT action every day next week 30 minutes prior to the TSP trade deadline.
The stock market will be open on Monday, but the TSP and bond markets will be closed for the holiday. TSP Talk Premium Services and the Free Market Commentary will also take Monday off and resume as normal on Tuesday.
Here are the weekly, monthly, and annual TSP fund returns for the week ending October 6:
SPY (S&P 500 / C-fund) started to trade below 200-day EMA this week. The ETF only closed below the moving average on Tuesday, but it seemed to get some extra support from a small gap (blue) it filled from early June. The rally sparked by the Jobs report on Friday got the price action away from the 200-day EMA and pushed it back toward the 20 and 50-day EMAs along with an open gap from September.
The C-fund was the only TSP fund outside of the G-fund to produce gains this week. With help from Friday's rally the C-fund ended the week up 0.52%.
The DWCPF index (S-fund) has already spent more than a couple weeks below its 200-day EMA. It fell lower with large caps to start the week and it also closed an open gap from June in the process. The index rallied on Friday, the S-fund gained 1.27% for the day, but it was not enough get pull the S-fund out of negative territory for the week. The S-fund fell 1.49% for the week, the worst return among the TSP funds.
The ETF EFA (I-fund) slipped below a long-term trend line this week. It attempted a comeback on Friday when stocks were rallying together, but the ETF ended the week with the trend line being the high. The I-fund fell 0.84% for the week.
The bond sell-off has had no relief. The F-fund continues to fall each week and again we saw a significant drop. The F-fund lost 1.17% for the week following its 0.97% loss the week before. The rise of bond yields has been a colossal catalyst to the stock market price action as well. Investors do not need to take on as much risk to get a decent return from their bond yields.
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Good luck and thanks for reading! We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at TSP Talk - Market Commentary. If you need some help deciding what to do with your account, perhaps one of our premium services can help.
Thomas Crowley
(TommyIV)
www.tsptalk.com
Weekly Wrap-Ups Archive
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The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
