Investors celebrated a blockbuster November as markets posted their biggest monthly gains in more than a year. The news was superb, as bonds posted their best monthly performance in nearly 40 years and the S&P 500 index returned a whopping 9.13%. For many, it felt like the stars aligned and their dream-scenario was coming true as robust growth, diminishing inflation, and slowing job growth pointed to a gentle landing and an end to rate hikes. But like the morning after a blow-out party, there may be a price to pay for all that enthusiasm.

Holiday jubilation came early to Wall Street last week as positive news about inflation led to a third straight winning week. The overall Consumer Price Index for October dropped to 3.2% annually from 3.7% the previous month—and from a peak, in this business cycle, of 9.1% in June 2022.

At the same time, core inflation, which excludes fuel and food prices, fell to 4% in October, the smallest increase since September 2021. Bond prices rallied sharply, as the yield on the 10-year Treasury dipped to 4.43%. A few weeks ago, it was above 5%, its highest since 2007.

Investors’ hopes for a Fed pivot towards lower short-term interest rates fueled the benchmark S&P 500 to rise sharply, climbing nearly 10% from its October lows, and propelled year-to-date returns on the bellwether index to more than 19%.

Time to pop open the champagne? Depends on what data you’re digesting. On the one hand, soft jobs data, slowing inflation, and a resilient economy are rekindling hopes for an economic soft-landing, which seemed nearly impossible a year ago. On the other hand, a more troubling downturn could be on the way. Some analysts predict large ripple effects from rising commercial property market foreclosures and a coming wave of corporate bankruptcies. Mounting debt-refinancing issues face even the most powerful private equity firms, and could lead to deeper problems for investors.

What we’re seeing now is great news, to be sure, but it doesn’t mean we’re out of the woods yet. Even Fed Chair Jerome Powell acknowledges this. All of which is to say, hope is warranted, but maybe not too much. Keep that champagne on ice.

Mixed messages rattled the U.S. bond market last week. First came hints from some Fed officials that further rate hikes may not be needed. Investors cheered the news and bonds rallied. But by mid-week, hot inflation data threw cold water on investors’ hopes and the bond rally turned into a sell-off as bond yields rose. By the end of the week, global concerns about the expanding Middle East conflict caused bond prices to rebound as investors searched for a safe haven. But the ping-pong game wasn’t over yet.

Here we are, nearly three-quarters of the way through 2023, and the markets continue to defy the pessimists and pundits who predicted a recession, a tanking economy, and big job losses as a result of the Fed’s aggressive series of rate hikes. None of that has happened as of mid-September. Of course, it still could.

It’s hot, and getting hotter. July 2023 was the hottest month on record, capping the eight hottest years on record globally. If you were among the millions of Americans at the boiling point, suffering from severe weather, disruptive blackouts, or skyrocketing energy bills, you may wonder what can be done. Here’s a viable alternative to inaction: You can strengthen your own economic resiliency and make your home a haven of efficiency. No matter what side of the political aisle you’re on, there’s an investment case to be made for choosing energy self-reliance. And now is the time to do it.

When June inflation data was released last week, you could almost imagine Fed Chair Jay Powell shouting like quarterback Patrick Mahomes after marching his team to a touchdown with no-look passes and fifty-yard bombs. “This is what I do! this is what I do!" Whether the Fed is unusually skilled or just lucky, investors cheered the indisputably good news: a year-over-year dip in inflation from 9 percent to just under 3 percent. While those who ridiculed Powell’s earlier “transitory inflation” comments have fallen mostly silent, it’s true that the last mile of inflation may be the hardest to tackle. Investment bankers and hedge fund managers caught in defensive positions have some explaining to do, but continue to warn, “Just wait, this won’t last.” Perhaps they’re right.

If you need a reminder that markets don’t behave according to predictions, look to the first five months of 2023. A string of U.S. banks went under, and a debt ceiling fight threatened to undermine the financial credibility of the United States. A wave of interest rate hikes failed to stamp out inflation, leaving a smoldering fire ready to reignite. Dire warnings about corporate earnings filled the airwaves. And yet the S&P 500 gained about 14 percent through mid-June, mostly on the back of risky tech assets. Let’s unpack the issues, then take a look at May markets.

With the clock ticking, the U.S. government could default on its debt obligations within the next four to six weeks. Unlike most catastrophes, this one is predictable and preventable. A default would wreak havoc on global markets and deeply undermine the reputation of the U.S. as a haven for investors. Many believe it would tip the country into recession. Let’s look at what the markets are saying about the scene now unfolding in the U.S. Congress.

Markets showed their resilience in the first quarter despite being rocked by a variety of unanticipated events. Investors who ignored the bad news and kept their focus on long-term outcomes were rewarded. In fact, the first three months of 2023 offered textbook lessons on the upsides of turbulence and benefits of long-term thinking.

Following a January rally, markets slumped in February after new reports signaled stubborn strength in the U.S. economy and job market. Investors hoping to see slower, smaller interest rate hikes had their hopes dashed when Fed Chair Jerome Powell indicated that additional tightening was likely necessary. Uncertainty deepened, even as the impacts of rate hikes began gathering like clouds over the economy, notably in construction, commercial real estate, and by early March, banking. We’ll look at the Fed’s tightrope act followed by a brief review of February markets.