Stocks ended the week mixed with the best performance in the emerging markets and the biggest decline in the Russell 2000 small cap index. The consumer price index reported a 3.3% from a year ago, clearly above the FED’s target of 2.0%. Producer prices have risen 3.5% from a year ago. While progress on inflation seems to have stalled, which could bode for a FED pause, a higher number of first-time claims for unemployment this week could prompt the FED to cut again next week.
It was a busy week for other central banks around the world. The European Central Bank cut its benchmark rate 0.25% to 3.0%. This was the third consecutive meeting where the ECB cut rates, now by a total of 1.0%. Switzerland surprised with a half percent interest rate cut from 1.0% to 0.5%. The Bank of Canada cut rates 0.5% to 3.25%.
Treasury bond yields rose with the 30-year bond yield at 4.614% and the 10-Year note at 4.397%. Freddie Mac reported that the average 30-year mortgage rate fell to 6.6%. Crude oil rose to $71.16 a barrel and natural gas rose to $3.285 per MMBTUs. The U.S. dollar index rose to 106.99 and gold rose to $2665.30 an ounce.
In economic reports this week:
- The Treasury Department reported that for the month of November, there were $302BN of receipts and $669BN of expenditures for a deficit of $367BN.
- For the fiscal year, beginning in October, receipts were $629BN, expenditures were $1253BN for a deficit of $624BN.
- The Commerce Department reported:
- Wholesale inventories rose 0.2% in October.
- Wholesale inventories rose 0.2% in October.
- The Labor department reported:
- The consumer price index rose 0.3% in November and was up 2.7% from a year ago.
- Excluding volatile food and energy, consumer prices rose 0.3% and was up 3.3% from last November.
- The producer price index rose 0.4% in November and was up 3.0% from a year ago.
- Excluding volatile food and energy, producer prices were up 0.1%, down from 0.3% increase in October.
- From a year ago excluding food and energy producer prices rose 3.5%.
- Seasonally adjusted first-time claims for unemployment were 242,000, an increase of 17,000 from the previous week’s revised level.
- The 4-week moving average of claims, designed to smooth out volatility, was 224,250 an increase of 5,750 from the previous week’s revised level.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- The consumer price index rose 0.3% in November and was up 2.7% from a year ago.
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
- Field production of crude oil rose from 13.513MM BPD to a record 13.631MM BPD.
- Natural gas storage fell 190BN cubic feet and is at about the highest level during the past five years at this time of year.
- Baker Hughes reported the number of oil rigs was unchanged at 482 and the number of natural gas rigs rose 1 to 103.
Please call us if you have any questions.
Loren Rex – Emeritus
Erik A Smith, AIF® – President & C.E.O.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly. The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indexes. The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange (more than 2500 stocks).
Sources:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W
https://ir.eia.gov/ngs/ngs.html
https://www.freddiemac.com/pmms
https://www.wsj.com/market-data?mod=nav_top_subsection
https://bakerhughesrigcount.gcs-web.com/na-rig-count
