December 13, 2019
The Federal Open Market Committee left short-term interest rates unchanged and indicated that the current stance of monetary policy was “appropriate” to support economic growth, a strong job market and inflation near the Fed’s 2% goal. The revised dot plot showed that 13 of 17 senior Fed officials anticipate no change in rates in 2020.
As anticipated, the U.S. and China reached a trade truce. The U.S. will not raise tariffs on the remaining $160 billion in Chinese goods, which had been set to go into effect on December 15. However, the agreement does not roll back previous tariffs.
Along party lines, the House Judiciary Committee approved two articles of impeachment against President Trump, but few see any chance that the Senate will have the two-thirds majority needed to remove the president from office.
On the economic data front, consumer price inflation was about as anticipated, but retail sales results for November fell a bit short of expectations (the seasonal adjustment accounts for the late Thanksgiving, but it’s difficult to get that right).
Next week, industrial production should rebound from the effects of the GM strike. The third estimate of GDP growth should be little changed from the previous estimate. November personal income and spending figures will help to fill in the picture for 4Q19 GDP.
Indices
| |
Last |
Last Week |
YTD return % |
| DJIA |
28132.05 |
27677.79 |
20.60% |
| NASDAQ |
8717.32 |
8570.70 |
31.83% |
| S&P 500 |
3168.57 |
3117.43 |
26.40% |
| MSCI EAFE |
1983.83 |
1969.77 |
15.35% |
| Russell 2000 |
1644.81 |
1614.83 |
22.06% |
Treasury Yield Curve – 12/13/2019
As of close of business 12/12/2019
S&P Sector Performance (YTD) – 12/13/2019
As of close of business 12/12/2019
Economic Calendar
| December 16 |
— |
Homebuilder Sentiment (December) |
| December 17 |
— |
Building Permits, Housing Starts (November) |
| |
— |
Industrial Production (November) |
| December 19 |
— |
Jobless Claims (week ending December 14) |
| |
— |
Current Account (3Q19) |
| |
— |
Leading Economic Indicators (November) |
| |
— |
Existing Home Sales (November) |
| December 20 |
— |
Real GDP (3Q19, 3rd estimate) |
| |
— |
Personal Income and Spending (November) |
| |
— |
UM Consumer Sentiment (December) |
| December 24 |
— |
Durable Goods Orders (November) |
| December 25 |
— |
Christmas Holiday (markets closed) |
| January 1 |
— |
New Year’s Day (markets closed) |
| January 10 |
— |
Employment Report (December) |
| January 29 |
— |
FOMC Policy Decision |
| January 30 |
— |
Real GDP (4Q19, advance estimate) |
All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.
The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor's returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.
Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business December 12, 2019.
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