Markets and Economy

Nationwide’s Chief of Investment Research and the Nationwide Economics team offer daily and weekly commentary and analysis of the equity and bond markets, including an overview of economic data being released, global market news, commodities and market performance by index returns. These timely insights can help you navigate markets and understand emerging trends.

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Capital Market Impact

Markets stabilize as seasonal headwinds shift to tailwinds

For the third quarter, the S&P 500® Index returned -3%, the weakest in a year, but still has a 13% year-to-date return. The behavior of the equity market has seen a subtle shift, with greater emotion and volatility in reaction to the Fed, rates, and inflation than at any point this year, with the VIX approaching 20 last week. Sentiment has also collapsed, with the AAII Sentiment Survey showing bulls collapsing to 28% after peaking above 50 in July, while bears are at 41%, nearly doubling in two months. 

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Economic Commentary

Strong Q3 but higher interest rates may finally begin to bite

Consumers are rounding out a strong third quarter which should result in another acceleration for real GDP growth to an annualized pace above 4.0 percent. But the momentum for spending is waning in the face of even higher interest rates and lingering inflation, while job gains continue to weaken. Moreover, the resumption of student loan payments, a likely government shutdown, and ongoing auto strikes set the stage for a sharp growth slowdown in the fourth quarter. Still, the long-awaited recession should be delayed into early 2024 and we expect the downturn to be modest in length and severity with activity rebounding over the second half of next year. Monetary policy should remain restrictive well into 2024, a downside risk for a deeper recession should the lack of credit and worsening affordability cut into consumer and business activity more than expected. 

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Economic Commentary

Higher-for-longer rates: Weekly Economic Review & Outlook

The Fed left the fed funds rate unchanged at the September meeting but showed a higher-for-longer path in their interest rate forecasts. The latest Summary of Economic Projections (SEP) painted the picture of a soft landing, with a mild dip in economic growth and modest rise in unemployment next year. In last week’s housing data, existing home sales fell again to the slowest pace since January, while housing starts also dropped due to a weak month for apartment construction.