U.S. equity indexes rose for the seventh consecutive week adding another 2½ to 3%. The Dow set a new record high that bested the previous peak of January 4th, 2022, nearly two years ago. The S&P 500 is about 1% its all-time high, and the NASDAQ is 8% short of its high-water mark. The TSX has not been as consistent as its American peers but has risen 9.6% over the same seven-week period, 8% under its peak.
Monetary policy releases encouraged this equity positivity. On Wednesday the U.S. Federal Reserve kept its target range for the federal funds rate at 5¼ to 5½ percent. The announcement began, “Recent indicators suggest that growth of economic activity has slowed from its strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.” The interest rate announcement also included the Fed’s Summary of Economic Projections. The Fed predicts that the Personal Consumption Expenditures Price Index will fall to 2.4% next year, 2.2% by 2025 and reach its 2% target by 2026. Accordingly, the rate setting committee’s “dot plot” forecasts three interest rate cuts of ¼ percent in 2024. Fed press conference and documents CNBC and Fed rate cuts CNBC and Fed Announcement
Elsewhere, the Bank of England (BoE) and the European Central Bank (ECB) also kept their interest rates unchanged as they see their economy cooling, job demand falling, and consumer prices rising in the short term. ECB release BoE rates
Just prior to the Fed’s announcement, the U.S. Bureau of Labor Statistics reported November’s Consumer Price Index. Prices rose 0.1% last month and 3.1% over the past year. November’s monthly inflation rose from October, but the annualized rate of inflation ticked down. BLS release
This Week and Beyond
In Canada, the new housing, raw materials, and producer price indexes will be released. On Tuesday StatsCan will report November consumer prices.
In the U.S., building permits, housing-starts, new and existing home sales will be announced, and the National Association of Home Builders will release its housing market index. Third-quarter Gross Domestic Product (GDP) estimates will arrive on Thursday. The Federal Reserve’s primary inflation indicator, Personal Consumption Expenditures Price Index (PCE) will be reported on Friday.
Globally, the Eurozone will report its Harmonized Index of Consumer Prices (HICP) for November. Japan will announce its imports, exports, and trade balance. The U.K. will release its consumer, producer, and raw materials price indexes.