Just over a week ago we were pushing up to the 5% level on the 10-year, and equities were breaking all sorts of support. The markets seem to have ignored the geopolitical risks and the stories of a wider story including which countries were involved and the obvious repercussions. Last week was all about rates and they are driving the stock markets.

The S&P500 saw its best week since November 2022, the index gained 5.9%, now up 14% for the year.

The yield for the 10-year ended the week at 4.55%, marking the latest drop since March.

This pullback in yields offers stocks some support, while higher rates affect corporate and individual’s borrowing costs and higher rates also make stocks look less attractive versus the risk-free return, raising the bar for riskier assets classes like stocks.

This week saw FOMC leave rates unchanged, hinting that the Fed could be done hiking rates, but still watching the data.

Friday’s latest jobs data showed, job growth slowed last month, with employers adding 150,000 jobs in October, the smallest gain since June. The consensus is that the economy is pulling back enough for inflation to recede at the same time as not pushing it into a recession, with interest rates nearing their peak.