Weekly Market Commentary

Stay up-to-date on markets and the economy with our latest weekly commentary report.

Read Time: 5 Min

December 13, 2024

Worldwide Headlines

  1. European Central Bank cuts rates again. This week, the European Central Bank cut its main Deposit Facility Rate by 25 basis points to 3.00%. This is the third consecutive meeting that this group has lowered its benchmark interest rate as the economy in that region continues to struggle. The U.S. Federal Reserve Open Market Committee (FOMC) meets next week with a 96% chance in the Fed Funds Futures market that they will cut their benchmark interest rate to a range of 4.25% to 4.50%. We will see what they do next week.
  2. Inflation continues to be in focus. The Consumer Price Index was an as expected +0.3% gain from the prior month in November. However, on a year-over-year basis the rate moved higher to +2.7%, which is up from +2.4% in September. In addition, the Core Rate (ex-food & energy) is at +3.3%, versus being +3.2% as early as July. Headline inflation is not moving noticeably higher, but it seems to be stalled. It will be interesting how the FOMC describes this next week.
  3. Commodity prices get ready for Winter. With the weather turning cold in the northern hemisphere, the commodity market is waking up to that fact. The price of Natural Gas is up over 10% over the past month and is 40% higher from a year ago. In other words, get ready for higher heating bills this winter.

Economic Reports

  1. Wholesale Trade Sales from October declined -0.1% from the prior month, though September was revised upward from +0.3% to +0.5%. This is a good measure to know for what the Retail/Wholesale relationship is. So far this year, this data measure has increased +0.1% per month.
  2. NFIB Small Business Optimism Index for November moved noticeably higher to a reading of 101.7 – its best reading since mid-2021. This is someone a repeat of Trump 1.0 when business sentiment gained sharply after the election.
  3. Consumer Price Index for November came in as expected with a +0.3% month-over-month gain and +2.7% year-over-year increase. Core inflation (ex-food & energy) remain higher at +3.3% year-over-year. Shelter Costs, one of the most persistent sources of inflation in recent years, cooled from the previous month, but the category still accounted for nearly 40% of the overall gain.
  4. Producer Price Index for November rose a more than expected +0.4% from the prior month and is now higher by +3.0% from the prior year. This is the first inflation gauge to move from the 2% range back to 3%. Interestingly, it was a surge in egg prices (up 55% from a month earlier on the impact of bird flu) that caused the increase, while other categories suggested a more muted increase.
  5. Weekly Initial Jobless Claims jumped to 242,000 from 225,000 the prior week. This was higher than expectation, as was Continuing Claims (1.866 million). The state with the largest post-Thanksgiving increase was California.
  6. Household Change in Net Worth for the third quarter rose by $4.8 trillion to a record $168.8 trillion. In the third quarter, the value of Americans’ equity holdings rose $3.8 trillion, while Real Estate advanced almost $200 billion. Business debt outstanding increased a 3% annualized rate, while consumer credit rose at a 2.5% pace. Mortgage debt climbed 3.1%. Household liquidity picked up to a record high. Deposits held by households and nonprofit organizations, which includes savings and checking account, as well as money market funds, rose by $379.5 billion to $18.9 trillion.

Markets this Week (mid-day Friday)

  1. U.S. Dollar Index – higher…DXY at 107.015 – near a 52-week high and +0.86% so far this week (1 yr. range = 100.381 to 107.554).
  2. Bond yields – higher…2-year Treasury yield up to 4.23%; 10-year gains to 4.38%.
  3. Stocks – mostly lower…only the MSCI EM Index is higher so far this week of the five major global indexes we track 4. Commodities – higher…5 of 6 sectors are higher in BCOM Index; only Softs are lower

Next Week

  1. Economic Reports
    • o Retail Sales, Industrial Production, NAHB Homebuilder Index, Housing Starts, Q3 final GDP revision, Leading Economic Index, Existing Home Sales, Personal Income/Spending
      • U.S. consensus QoQ real GDP est.: Q1 = +1.6%, Q2 = +3.0%, Q3 = +2.8%, Q4 = +2.1%, Q1 = 1.9%
      • U.S. consensus YoY inflation est.: Q1 = +3.3%, Q2 = +3.2%, Q3 = +2.6%, Q4 = +2.6%, Q1 = 2.3%
  2. Earnings Reports
    • Q3-2024 S&P 500 EPS estimate at the beginning of the period = +4.2%\
    • Q3-2024 S&P 500 summary to date: 496 reported; 75% beat estimate; +9.0% EPS YoY
    • S&P 500 YoY EPS estimates: Q1 = +7.9%, Q2 = +14.0%, Q3 = +9.0%, Q4 = +7.6%, Q1 = 11.7%, Q2 = 9.7%
  3. Events
    • Central bank meetings in USA (Fed), Japan, England, Pakistan, Chile, Indonesia, Thailand, Mexico, Norway, Sweden, Taiwan, Colombia, Russia
    • EU leaders hold their last meeting of 2024 in Brussels.

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