Q3 Economic and Market Review: All Eyes on the Direction of Interest Rates

Executive summary:

  • The direction of interest rates was the biggest factor moving markets in the third quarter.
  • Sentiment on technology stocks appeared to shift.
  • Money market assets reach historic high, but returns lag stock market.

Every quarter we produce an Economic and Market Review (EMR) in which we delve into the key issues and trends in the markets. We also produce a series of videos with Mark Eibel, our director of client investment strategies, to take a deeper look into some of the more interesting charts we create as part of the EMR.

In this quarterly blog, Mark will discuss some of the slides that we feel are most important for advisors as they help their clients prepare for what lies ahead.

The third quarter of 2023 was a bit of a roller-coaster as the direction of interest rates became the most significant factor moving markets. Formerly high-flying sectors took a pause while other sectors that had been depressed all year did well. For example, commodities had been underperformers all year on the weak economic outlook but did well in the quarter as key oil producers cut supply.

Given these trends, what’s next for investors? Let's take a closer look…

Tax-Efficient Investing

In a rising interest rate environment, it may be helpful to invest with taxes in mind. Did you know that municipal securities can offer significant tax advantages, even if their yields appear lower? The chart below underscores the benefits of including municipal bonds in non-taxable accounts, where they can help create better after-tax returns.

Not all Interest is Equal in the presence of Taxes