Despite inflation fears, the markets staged a strong comeback this week with the S&P 500 index posting the biggest gains. 

The consumer-price index hit 6.8% in November, the highest since 1982.

October saw a sharp decrease in the trade deficit due to surging exports of energy and agricultural goods that more than offset the increase in imports.  However, imports have been hampered by an expanding backlog in U.S. ports.

Two large Chinese property developers, China Evergrande Group and Kaisa Group Holdings defaulted on U.S. dollar bond payments.  Chinese real-estate companies are struggling with falling home sales, government restrictions on borrowing and a bond-market selloff.

Treasury yields rose with the 30-year bond yield closing at 1.885% and the 10-Year note closing at 1.486%.  Crude oil rose to $72.00 a barrel and natural gas fell to $3.883 per MMBTUs.  The U.S. dollar index fell to 96.05 and gold rose to $1783.00 an ounce.

In the economic numbers:

• The Commerce Department reported that the U.S. trade deficit fell 17.6% in October.

• China reported:
  • Factory-gate prices in November were up 12.9% from a year earlier, down from the 13.5% rate in October.
  • Consumer-price index rose 2.3% from a year ago in November up from 1.5% in October.
• The Labor Department reported:
  • The consumer-price-index was up 6.8% in November from a year earlier, the highest since 1982.
    • Core prices, excluding volatile food and energy, rose 4.9%, up from 4.6% in October.
    • Prices for rent furniture and airfares and gasoline rose while prices for recreation, communications and non-gasoline energy fell.
  • Job openings rose from 10.6MM in September to 11.0MM in October and are at the second highest on record.
  • Job quits fell from 3.0% in September to 2.8% in October.
  • First time claims for unemployment fell to 184,000 from a revised 227,000 in the prior week.  This was the lowest number in 52 years, when the U.S. population and workforce was smaller.
  • The 4-week moving average of claims, designed to smooth out volatility, fell to 218,750.
  • Continuing claims were little changed about 2.0MM the week ending November 27^th. 
  • 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 rose from 11.6MM to 11.7MM BPD.
  • Natural gas storage fell 59BN cubic feet and is slightly below the 5-year average at this time of year.
• Baker Hughes reported the number of active oil rigs rose 4 to 471.  The number of active natural gas rigs rose 3 to 105.

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Loren C. Rex, CFP^®, MA                                                                     Erik A Smith, AIF®

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 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.