The December meeting was again slated to be ‘the one’, as in the meeting where interest rate policy changed for the first time in a decade and almost exactly seven years after the fed funds rate was cut to just over zero. And it finally happened. The target fed funds rate has moved from 0.00-0.25% to 0.25-0.50%, so the equivalent of a quarter-percent move.
- Economic data for the week was led by a marginal showing in retail sales, a drop in consumer and business sentiment, as well as continued impacts of disinflationary impulses in import prices and PPI.
- Global equity markets fell dramatically on the week with continued concern over the impact of falling crude oil prices. Bonds fared well during the week, as interest rat
Following very strong gains at the start of the quarter, global markets took a bit of a breather in November as investors digested uneven economic data and awaited more clarity on central bank policies. As has been the case for some time now, diverging monetary policy between the United States and the rest of the world continues to be a major theme in the financial markets.
- Economic data again showed some mixed results, with manufacturing (and some services results for that matter) coming in weaker than expected, while the monthly employment situation report for November came in strong. The labor report was seen as raising the chances for a Fed interest rate hike in December.
- In a light week for economic data, retail sales disappointed somewhat while consumer sentiment and jobs/claims data remained strong. Producer prices fell, especially on a year-to-year basis, which continues to reflect non-inflationary pressures throughout the system.
- Equity markets fell back sharply on the week due to a number of economic and earnings-related factors
Increasing concern about China’s economy, accompanied by a surprise albeit modest devaluation of the yuan currency, helped trigger a sharp drop in global equity markets in late August, with the S&P 500 falling 12% from its high reached just a month earlier. This marked the first 10%-plus correction for the U.S.
- Economic data came in a bit better than expected on average, with the ISM non-manufacturing index and the October employment report surpassing expectations. Conditions were less appealing on the manufacturing side, as ISM manufacturing, factory orders and related data continued to show some softness.
- Domestic equity markets rose on expectations of a solid jobs report
- Economic data for the week was again mixed, with advance GDP for the third quarter coming in at a tempered level, but not too far off of expectations, while housing numbers and consumer sentiment surveys disappointed. However, the Chicago PMI manufacturing report moved back up into positive territory.
- Equity markets gained a bit on the week in the U.S., but struggled