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At the annual meeting of central bankers at Jackson Hole, Wyoming, on Friday, Jerome Powell, the Chair of the U.S. Federal Reserve Board, signalled that he supported the Fed’s “tapering” its quantitative easing program this year, but any official announcement would be postponed until November’s meeting of the rate-setting Federal Open Market Committee. That set off a rally in stocks and bonds, with market indexes again closing at fresh record highs.
The remarks came as the U.S. all-items consumer price index rose to an annual 5.4% in July, while the core rate, excluding food and energy prices, ticked down to 4.3%. Powell also noted that he believes supply-chain issues should ease, reducing demand pressure on the inflation rate. In Canada, the inflation rate in July followed suit, climbing to an annual 3.7% from 3.1% in June.
The University of Michigan’s consumer sentiment index slipped to 70.3 as earlier optimism loses steam in the face of rising Covid delta-variant infections and higher prices at the grocery store and the gas pump.
The S&P 500 Composite Index gained 1.5% on the week, closing at a record high. The growth-oriented Nasdaq Composite Index advanced 2.8% on the week, also closing at a new record high. And Toronto’s S&P/TSX Composite Index also closed at a record high, adding 1.5% on the week, buoyed by the general advance in global markets. Strength in the energy sector also contributed to the advance as crude oil rose 10.3% on the week, driven by fears of supply disruptions in the Gulf of Mexico should an approaching tropical storm gain hurricane strength. Gold and precious metals stocks also gained, as the price of gold advanced 2.1% on the week.
* IA Clarington gets active with a global bond ETF. IA Clarington Investments Inc. on Aug. 25 launched an Active ETF Series option for its IA Clarington Loomis Global Multisector Bond Fund. The fund invests in both investment-grade and non-investment grade U.S. corporate bonds, convertible securities, foreign debt instruments, including those in emerging markets and related foreign-currency transactions, and U.S. government securities.
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