Major stock indices had substantial gains this week. The Federal Reserve met and chose to leave the short-term interest rate at a range of 5.25 to 5.5%. The FED members’ dot plot predicted that this rate likely would be cut 0.75% by the end of 2024 which may mean three – quarter point cuts. Although one FED member stressed after the meeting that the FED is not talking about rate cuts at this point and is focused on whether the policy is sufficiently restrictive to meet the FED’s 2% inflation goal.
The European Central Bank met and left its short-term rate unchanged at 4.5%, noting progress in moving towards its 2% inflation goal. The ECB did choose to accelerate reducing its bond portfolio in the second half of 2024 at €7.5BN per month.
The Bank of England met and left its short-term rate unchanged at 5.25% noting that there was still some way to go in reaching its inflation goal. Neither the ECB or the BOE have indicated they will cut interest rates next year.
Treasury bond yields fell with the 30-year bond yield at 4.013% and the 10-Year note at 3.916%. Freddie Mac reported that the average 30-year mortgage rate fell to 6.95%. Crude oil rose to $71.60 a barrel and natural gas fell to $2.473 per MMBTUs. The U.S. dollar index fell to 102.60 and gold fell to $2033 an ounce.
* The Federal Reserve reported that industrial production rose 0.2% in November.
* Manufacturing rose 0.3%, with automotive products rebounding 7.5% following the UAW strike.
* Mining, including oil and gas production rose 0.3%.
* Utilities fell 0.4% on mild weather.
* From a year earlier, industrial production has fallen 0.4%.
* The Labor Department reported:
* The consumer-price index rose 0.1% in November after being unchanged in October. From a year earlier, the index has risen 3.1%.
* Excluding volatile food and energy, the CPI rose 0.3% in November and 4.0% year over year.
* The producer-price index for final demand was unchanged in November. This follows a 0.4% decline in October.
* From last November producer prices have risen 0.9%.
* Excluding volatile food, energy and trade services, the PPI rose 0.1% in November and is up 2.5% from a year ago.
* Seasonally adjusted first-time claims for unemployment were 202,000, a decrease from the previous week’s revised level of 221,000.
* The 4-week moving average of claims, designed to smooth out volatility, was 213,250, an decrease of 7,750 from the previous week’s revised level.
* For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
* 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 was unchanged at 13.1MM BPD.
* Natural gas storage fell 55BN cubic feet and is above the 5-year average at this time of year.
* Baker Hughes did not issue a report on oil and gas drilling rigs this week.
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.
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
https://www.census.gov/economic-indicators
Consumer Price Index Summary – 2023 M11 Results (bls.gov) <https://www.bls.gov/news.release/cpi.nr0.htm>
Producer Price Indexes – November 2023 (bls.gov) <https://www.bls.gov/news.release/pdf/ppi.pdf>
