Economic Data Watch and Market Outlook
Global equity markets advanced modestly for the week (MSCI World, +0.85%) with International Developed markets slightly outpacing U.S markets ( MSCI EAFE, +0.84%, S&P 500, +0.77%).The Bloomberg Aggregate Bond rose 14 basis points for the week. Volume in both markets were slow.
The chart below, published by Factset, highlights a poll by Monmouth University related to retail sales. The results show that retail spending has increased as inflation decreased and is an indicator of consumer sentiment with consumers feeling that they have more purchasing power than they did during the previous Holiday Season.
A corporate survey organized by the Atlanta Fed, The Richmond Fed, and Duke University highlight that most CFOs are keeping consistent or increasing their spending.
Personal Consumption Expenditure (PCE) results were released on Friday by the Bureau of Economic Analysis. November was slightly lower that expected, up 2.6% versus an estimated 2.8% year-over-year. The Core was up 3.2% versus and estimate of 3.4%.
With inflation slowing and the Fed indicating that they expect possibly three rate cuts (orange line) in 2024, the market
( blue line) is expecting up to six. Market expectations get more precise as Fed meetings get closer but the next table indicates that longer range expectations are rarely correct.
Most markets were closed on Monday to celebrate the Christmas Holiday. Expect a light data week this week too with the only major key indicator release, jobless claims, occurring on Thursday.
Happy Holidays from the Clearbrook Team!
Authors:
Jon Chesshire, Managing Director, Head of Research
Sam Morris, Analyst
Data Source: Factset, HFR (returns have a two-day lag), Jim Bianco Research, , Morningstar, Morgan Stanley, Standard & Poor’s and the Wall Street Journal.