TommyIV's TSP Talk Blog

The C and S-funds had their first negative week of the new year, but a rally on Friday kept those losses under 1%. We had another four day trading week and the market had a lot to face. The market accumulated a pile of inauspicious economic data; low home sales, a decelerating Produce Price Index, and falling retail spending knocked the wind out of the optimism that gave the TSP stock funds their impressive start to 2023. The S&P 500 (C-fund) was down the first three days week that added up to a 2.5% loss heading into Friday.

Netflix earnings Thursday night sparked a rally Friday that would erase most of the weekly losses for the C and S-fund. It was impressive and hopeful for the bulls that this rally carried throughout the day on Friday. The C-fund added 1.89% and the S-fund added 2.15% on the day. It is telling to still see life in the bulls after the indices arguably got too extended too quickly. There is plenty to be concerned about and a perfect time to take profits early in the year; yet there remains an appetite for stocks.

One concern is a potential mismatch in Federal Reserve policy expectations and what we'll actually see from the Fed moving forward. The slowing economic data validates that the Fed rate increases are doing what they intended, and investors see this as time to let off the brake before recession fears materialize. Publicly the Fed has maintained a hawkish stance on the path of rate hikes to stave off expectations of monetary easing. The Fed raised rates by 0.50% in December after a succession of 0.75% increases. The latest economic data has the probability of a 0.25% rate increase for their early February FOMC meeting at more than 99%; up from 95% at the beginning of the week.

Something else to look to keep an eye on as investors is the debt ceiling. The government has reached its spending limit yet still has obligations. This is a reoccurring issue that typically leads to the debt ceiling being raised and the problem kicked down the road again. However, their could be political motives this time around that could potentially lead the U.S. to defaulting on some of its debts in order to pay for other obligations. A similar result happened in 2011 and led to a the U.S. credit rating to drop from AAA to AA and had economic consequences. This is not what investors want when the economy is already teetering on the edge of a recession.

Reclaiming the title for best return so far this year is the I-fund which was the only TSP stock fund to produce a gain this week. The I-fund was up 0.63% but also faced weekly losses heading into Friday.

Bonds (F-fund) inched up this week by 0.14%.


Looking for an edge on your TSP return? Get the Last Look Report for as low as $4.19 / month. The report is a daily email on the TSP Talk AutoTracker moves, news, forum threads, and more before the IFT deadline. The service is aimed to help you make your own IFT decisions by giving you relative information 30 min prior to the deadline including where the members of TSP Talk are moving their money.




Here are the weekly, monthly, and annual TSP fund returns for the week ending January 20:




SPY (S&P 500 / C-fund) seemed to reach its price resistance that lined up with the lows of a trading channel that started in November. The ETF did have its 50-day EMA act as support Thursday and Friday before the rally that put the price back above its 200-day EMA. The C-fund lagged the TSP funds for the week with a loss of 0.65%





The Dow Completion Index (S-fund) reached an intraday peak Wednesday that matched that of a high in November. The index traded the rest of the week between its 50 and 200-day EMA. The S-fund was down 0.39% for the week.




The I-fund (EAFE Index /EFA) jumped between gains and losses for the week but eventually landed on the positive side by the end of Friday. This gave the I-fund the only positive return among the TSP stock funds for the week. Forum members contributed long-term insight in the I-fund on the thread raven's fan account talk. The I-fund was up 0.63% for the week and has accumulated a 7.59% return so far in 2023.




BND (Bonds / F-fund) was up early in the week, gapping up on Wednesday. The ETF slipped to fill that open gap but remained above its 200-day EMA, yet fell below the support of a trading channel. The F-fund ended the week with a gain of 0.14%.




Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.


Thomas A Crowley

wwww.tsptalk.com
Last Look Report
Facebook | Twitter

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.