December 5th – Weekly Update

  • U.S. equity markets cooled off after their recent, post-election rally while oil prices rocketed off the back of an OPEC output deal. The S&P 500, Dow Jones and Nasdaq were relatively flat during the period, oil finished up gaining over 12%. Gold was slightly down, impacted by persistent monetary policy speculation, and the 10-year U.S. Treasury note yield ended the week at approximately 2.39%.
  • Oil rallied after OPEC voted to implement a production cut for the first time in eight years.
  • A 15-session streak of gains by the Russell 2000 Index, the longest such run since 1996, came to an end during the period – the index was down for the week.
  • Data from the National Retail Federation (NRF) suggests some 154 million people shopped over the Thanksgiving weekend. While this number was up from 151 million in 2015, the NRF noted that average spending per person declined to $289.19 from last year’s $299.60.
  • Stronger U.S. growth is trumping most other market concerns for now, including the Italian referendum “no” vote which may open the door for another European antiestablishment movement.
  • Robust U.S. economic data including a stronger than expected revision to 3Q U.S. gross domestic product (GDP) growth; a significant drop in the unemployment rate; and new post-recession highs in consumer confidence support the increasing expectation of a December rate hike.
  • 3Q 2016 GDP growth was revised up to a 3.2% annualized rate from an initial estimate of 2.9%. This was ahead of the 3.0% consensus and the fastest pace in three years. Unemployment fell to 4.6% in November, a nine-year low. Consumer confidence for November jumped to 107.1, ahead of the 101.1 consensus and up from 98.6 in October. The reading was the highest since July 2007.
  • Year over year Consumer Price Index (CPI) data in the euro zone was flat with a November reading of 0.6% compared to 0.5% in November 2015, in line with the forecast. The preliminary CPI for Germany measured 0.8% in 2016 compared to 0.8% in November 2015, also in line with forecasts.

CPWM Weekly Market Monitor (2016.12.05)