· U.S. economy delivered strong growth in Q3 2023, in sharp contrast to Europe, Japan and China.
· Unemployment remains low at 3.9% and the labor market remained steady in October.
· Employees won large wage gains in automotive, fast food sectors. Wages grew 4.1% year over year.
· Higher interest rates seem to be impacting real estate and fixed investment the most, consumption the least.
· Inflation moved lower but remained above the Fed’s target level.
· U.S. equity markets, as measured by the S&P 500, were lower for the third month in a row.
· U.S. fixed income markets, as measured by the Bloomberg Aggregate Index, fell for the sixth consecutive month.
· U.S. 3-month Treasury Bill yields reached 5.6%, a new high for this economic cycle.
· Federal Reserve held rates steady without indicating rate cuts are imminent.
· Federal Reserve believes its ‘restrictive stance is putting downward pressure on economic activity and inflation’.
· Federal Reserve reduced its balance sheet by $1T and noted higher long rates are tightening financial conditions.
· Bank loan growth, which remained flat from April to September, ticked marginally lower in October.
· As bank lending slows, private credit managers remain optimistic about the lending environment.
· Given high levels of dispersion across public equity markets and reasonable deal activity, many hedge funds have
noted a favorable backdrop for their strategies.
· Private equity fundraising and deal activity continue to trend lower. PE drawdown figures are improving, but
venture drawdowns are now lagging public market levels.