Chief Economist Scott Brown discusses the latest market data.
As expected, the Federal Open Market Committee accelerated the reduction (“tapering”) of its monthly asset purchases (now expected to end in March rather than June). The policy statement indicated that “job gains have been solid in recent months and the unemployment rate has declined substantially.” In his press conference, Chair Jerome Powell noted that “while the drivers of higher inflation have been predominantly connected to the dislocations caused by the pandemic, price increases have now spread to a broader range of goods and services.”
Retail sales rose 0.3% in the advance estimate for November (+18.2% y/y). While the increase was disappointing relative to expectations, it followed a 1.8% jump in October and the level of sales remains about 15% above the pre-pandemic trend. The Producer Price Index rose 0.8% in November (+9.6% y/y). Import prices rose 0.7% in November (+11.7% y/y). Manufacturing output rose 0.7% (+4.8% y/y and +2.1% over the last two years), with broad gains across industries led by a 2.2% gain in motor vehicles (down 5.4% y/y and 6.3% lower than two years ago).
Next week, the economic data reports should not be market moving. Figures on durable goods shipments and personal spending will help to fill in the 4Q21 GDP picture. Looking ahead, we’ll get some fresh economic data in the first week of January, although the ISM surveys and employment data will be subject to seasonal noise.
Commodities
| |
Last |
1 year ago |
| Crude Oil |
70.94 |
45.52 |
| Gold |
1,776.70 |
1,838.50 |
Bond Rates
| |
Last |
1 month ago |
| 2-year treasury |
0.69 |
0.42 |
| 10-year treasury |
1.50 |
1.44 |
| 10-year municipal (TEY) |
1.63 |
1.66 |
Treasury Yield Curve – 12/17/2021
As of close of business 12/16/2021
S&P Sector Performance (YTD) – 12/17/2021
Economic Calendar
| December 10 |
— |
Leading Economic Indicators (November) |
| December 22 |
— |
Real GDP (3Q21, 3rd estimate) |
| |
— |
CB Consumer Confidence (December) |
| December 23 |
— |
Jobless Claims (week ending December 18) |
| |
— |
Durable Goods Orders (November) |
| |
— |
Personal Income and Spending (November) |
| |
— |
UM Consumer Sentiment (December) |
| December 24 |
— |
Christmas Eve (markets closed) |
| January 7 |
— |
Employment Report (December) |
| January 12 |
— |
Consumer Price Index (December) |
| December 26 |
— |
FOMC Policy Decision |
| December 27 |
— |
Real GDP (4Q21, advance estimate) |
All expressions of opinion reflect the judgment of the author 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 16, 2021.
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