I. What Moved Markets Last Week
- U.S. stocks extended their bull run to eight straight weeks. The November core personal consumption expenditures price index rose by just 0.1% from October and was up 3.2% from a year ago. For the week, the Dow rose 0.22%, the S&P 500 gained 0.75%, and the Nasdaq climbed 1.21%, as per Bloomberg data. The S&P 500 Index briefly moved within 84 basis points of its all-time intraday high at the start of 2022, while the Nasdaq 100 Index and Dow managed new records.
- A continuing downturn in German manufacturing sentiment stoked recession fears. The ifo Institute’s business climate index fell to 86.4 in December from 87.2 in November as manufacturers said their current business situation was significantly worse and that their order books were continuing to shrink.
- In a widely expected move at its December meeting, the Bank of Japan maintained its key short-term interest rate target at -0.1% and stated it would continue with its yield curve control policy.
- Several Federal Reserve speakers have sought to push back on bullish market expectations for early interest rate cuts, which built up in the wake of last week’s Federal Open Market Committee meeting. Williams, Mester, and Goolsbee have all sought to dispel the notion that monetary easing could come as early as the end of the first quarter of 2024.
- Consumer confidence rose in December by 9.7 points, its biggest month-to-month increase since early 2021, as Americans grew more upbeat about the labor market and the inflation outlook.
II. Looking Ahead
- The most important economic numbers are likely to be the remaining regional surveys of the manufacturing and service sectors, which will complete the outlook for the December reports of the ISM manufacturing index on Wednesday.